The congressional commission that investigated the 2008 financial crisis concluded that the United States’ consumer-protection system was “too fragmented to be effective.” In response to that finding, in 2010 Congress created the Consumer Financial Protection Bureau as part of the Dodd-Frank Act. The CFPB – whose website describes the bureau as a “U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly” – is led by one director appointed by the president and confirmed by the Senate to serve a five-year term; once the director has been confirmed, the president can only remove her for “inefficiency, neglect of duty, or malfeasance in office.” On March 3, the Supreme Court will hear oral argument in a challenge to the constitutionality of that leadership structure.
The question came to the justices last year, after the CFPB initiated an investigation into whether Seila Law, a California-based law firm that provides debt-relief services to consumers, violated telemarketing sales rules. When Seila Law declined to respond fully to the CFPB’s request for information and documents, the agency went to federal court in California to enforce the request. Seila Law responded by challenging the CFPB’s authority to issue the request. The law firm argued that the CFPB’s structure is unconstitutional because the bureau is headed by only one director, who wields significant power but can only be removed “for cause” rather than “at will” – that is, for any reason.