In a victory for President Trump, the Supreme Court ruled Monday that he has the right to dump the director of the Consumer Financial Protection Bureau without cause.
The court ruled that a law passed by Congress went too far in protecting the agency from executive branch pressure.
The vote was 5 to 4, with the five justices appointed by Republican presidents in the majority, and the four Democratic-appointed justices in the minority.
The bureau, conceived largely by Sen. Elizabeth Warren (D-Mass.), was established during the Obama administration to protect consumers. Many Republicans viewed it as bureaucracy run amok. It arose in reaction to the 2008 financial crisis.
To insulate the agency from presidential meddling, the law creating it stated that the president could only oust the director for cause, defined as “inefficiency, neglect of duty or malfeasance.”
Trump attacked the agency virtually from his inauguration. He appointed former Rep. Mick Mulvaney (R-S.C.) as interim director, after the agency’s original director, Richard Cordray, resigned in late 2017.
Mulvaney went after it with a vengeance. Business groups weren’t too happy with the agency either. It was a law firm, Seila Law, that filed the suit which led to the Supreme Court ruling.
Seila Law was upset with an investigation of its debt relief services. The firm argued that the CFPB didn’t have the authority to investigate because its director had unconstitutional protection from presidential control.
The U.S. Court of Appeals for the Ninth Circuit in San Francisco ruled against Seila Law, saying court precedents limited presidential power in this area. But the Supreme Court overruled.