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The Supreme Court appeared divided Tuesday over the limits of a unique aspect of presidential power, and the extent so-called "independent" federal agencies have from executive oversight.
At issue is whether the president has the authority to fire the head of the Consumer Financial Protection Bureau, an agency created by Congress in the wake of the 2008 recession and mortgage crisis.
A ruling from the high court could affect the authority of dozens of other federal agencies with quasi-independent status, like the Federal Reserve and the Social Security Administration.
Congress has insulated members of those boards, including its directors, from being fired by the president without cause.
Nearly 75 minutes of oral arguments in the courtroom produced little consensus.
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"This is a very modest restraint" of executive power, said Justice Ruth Bader Ginsburg. "It stops the president from, at whim, removing someone, replacing someone with someone who is loyal to the president rather than to the consumers that the [CFPB] Bureau is set up to serve."
But Justice Brett Kavanaugh worried about one practical effect of the current restrictions.
"Just how this will play out if you were to win, it's really the next president who's going to face the issue, because the head of this agency will go at least three or four years into the next president's term, and the next president might have a completely different conception of consumer financial regulatory issues yet will be able to do nothing about it," he told the attorney defending the agency's authority. "How do we deal with that real world consequence that seems different and troubling?"
The CFPB was the idea, in part, of Democratic presidential candidate Sen. Elizabeth Warren, who is competing in the Super Tuesday primary contests. She has made consumer rights a major part of her platform.
"We protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law," according to the agency's enforcement mission.
Under the 12-year-old Dodd-Frank Act that addressed the financial crisis, the agency is headed by a single director for a five-year term, meaning a new president would be unable to immediately remove that person, except for "inefficiency, neglect of duty or malfeasance in office."
Eight months into office, President Trump appointed Mick Mulvaney as acting director and he is now the White House chief of staff. The current director is Kathy Kraninger.
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A California consumer law firm that was being investigated by the CFPB brought the current case, challenging the agency's authority and structure. Critics of the agency say it has too much unaccountable power and hamstrings the president appointment power. Supporters say the agency's congressionally created structure protects it from undue presidential pressure or interference.
But several justices noted the CFPB's single director is unlike other independent federal agencies that have multiperson boards, including the Federal Deposit Insurance Corporation, Securities and Exchange Commission and Federal Communications Commission.
The Obama administration had backed the CFPB's mandate, but the Trump administration took the unusual step of refusing to defend a congressional law in court.
"The president stands for election. The director of the CFPB does not," said Noel Francisco, the Justice Department's solicitor general. "So, if the director is insulated from presidential oversight, then her exercises of executive power are insulated from democratic control. And that's not the structure that our Constitution creates and requires."
The Democrat-led House of Representatives argued in defense of the CFPB. Consumer rights groups also urged the high court to preserve the status quo.
"The case before the court today isn’t about some complicated regulatory principal, it’s about a bunch of bad actors in the financial marketplace who don’t want strong rules or strong regulators governing their behavior," said Allied Progress director Derek Martin. "People with an axe to grind against the federal consumer bureau are not credible voices to challenge its independence, or indeed its very existence."
The case is Seila Law LLC v. Consumer Financial Protection Bureau (19-7). A ruling is expected by late spring.
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