The Supreme Court Is Poised to Strike Down a Major Obama-Era Agency

Ilya Shapiro

Last week, the Supreme Court agreed to hear what could end up being the most consequential case of the term — in a year where the justices are already taking up employment discrimination, the Second Amendment, abortion, DACA, school choice, and other issues of higher political salience. In Seila Law LLC v. Consumer Financial Protection Bureau, the Court will decide the constitutionality of an agency long criticized not just by the business community and free-market-oriented politicians but also by constitutional scholars who see major problems with its structure as a single-director agency seemingly unaccountable to the president or anyone else.
The lawsuit was brought by a law firm that assists in resolving personal-debt issues, among other legal work that puts it in the crosshairs of those who, like Senator Elizabeth Warren, want greater regulation of consumer-facing financial services. When the Consumer Financial Protection Bureau, which Warren helped design as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, began an investigation into the firm’s practices, Seila Law argued that the agency’s structure was constitutionally defective. A federal district court in Santa Ana, Calif., rejected that claim, and the U.S. Court of Appeals for the Ninth Circuit affirmed its ruling.
The CFPB is the most independent of independent agencies, with power to make rules, enforce them, adjudicate violations in its own administrative hearings, and punish wrongdoers. And yet a single director heads the agency, one who can be removed only “for cause” — malfeasance rather than, say, a change in presidential policy priorities. The CFPB doesn’t even need Congress to approve its budget, because its funding requests are rubber-stamped by another agency insulated from political control: the Federal Reserve. The CFPB has regulatory authority over 19 federal consumer-protection laws. This concentration of power in the hands of a single, unelected, unaccountable official is unprecedented and cannot be squared with the Constitution’s structure, or with its purpose of protecting individual liberty from government overreach.
The Constitution created three co-equal branches keeping one another in check to promote liberty and prevent any single person or entity from growing too powerful. During the 20th century, however, the federal government began creating “independent agencies,” typically headed by multiple commissioners appointed by the president...

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