Supreme Court Agrees to Hear Case Challenging CFPB Constitutionality

On October 18, 2019, the U.S. Supreme Court granted Seila Law LLC’s petition for certiorari, which challenges the CFPB’s current structure as unconstitutional.  In particular, the petitioner argues that for cause removal restrictions applying to the CFPB Director are unconstitutional.  Thus, the Court must decide two questions.  First, are for cause removal provisions for the CFPB Director constitutional?  Second, if the provisions are unconstitutional, can they be severed from the Dodd Frank Act or must the entire Act be struck down?  

As part of its briefing in this case, the CFPB abandoned its position that the provisions were constitutional; instead, the CFPB has now taken the stance that the provisions are unconstitutional.  Thus, neither party is arguing for the constitutionality of the for cause removal provisions, and the Supreme Court has selected a former U.S. Solicitor General to defend the agency’s constitutionality. 

The Supreme Court has requested the parties to specifically answer whether the Court can sever the for cause removal restrictions from the Dodd-Frank Act if the provisions are found unconstitutional.  In the Government’s brief, the CFPB argued that if the provisions were unconstitutional, the proper remedy would be for the Court to sever the removal provisions, rather than invalidate Title X of the Dodd-Frank Act entirely.  Additional WBK coverage of the case is available here.