In the coming months, the U.S. Supreme Court will decide whether the structure of the Consumer Financial Protection Bureau (“CFPB”) is constitutional. The Court will specifically look at whether the CFPB’s structure, which insulates the Director of the Bureau from the President, violates the separation of powers.
In anticipation of the ruling, the Trump Administration asserted in its brief that the functions of the CFPB will not be disturbed regardless of the Court’s decision. The brief, filed by the Department of Justice and co-signed by the CFPB, states that if the Court holds the for-cause removal provision unconstitutional, the Bureau should still be permitted to “commence or continue enforcement proceedings.”
If the Court does deem the for-cause provision of the Dodd-Frank Act unconstitutional, the President will be able to fire the Director at-will. The Court will determine whether to agree with the Administration’s assessment and sever the for-cause removal provision or to strike down the law in its entirety. That seems unlikely at this point.