NFIB Legal Center Argues CFPB Unconstitutional

Date: January 06, 2020

Our Constitution protects individual liberties by dividing power among the three separate branches of government. Congress makes the laws, while the Executive Branch executes and enforces the law. And then of course, it’s the role of the courts to say what the law is. In theory no one person or political institution can wield excessive powers under this system. But with the enactment of the Dodd Frank law and the creation of the Consumer Financial Protection Bureau (CFPB) during the Great Recession, we saw something unprecedented—something that the Founding Fathers would have found deeply troubling: A blue-print for tyranny.

Never before in American history had Congress vested total regulatory power in one unelected bureaucrat. But with Dodd Frank, Congress created a federal agency with sweeping regulatory powers headed by a single agency director. By statute, the Director of CFPB is unaccountable to the President. This was supposedly meant to ensure that the CFPB could execute its mission to enforce consumer financial protection laws independently, without influence from politicians. But what it really means is that the CFPB Director is totally unaccountable to the American people. For this reason, the Supreme Court is questioning whether CFPB is constitutional as currently structured?

NFIB Small Business Legal Center joined with Southeastern Legal Center in urging the Supreme Court to take this important case. And now that the Supreme Court has granted certiorari to decide Selia Law v. CFPB, we’ve filed another amicus brief making our case as to why a single unaccountable agency director is incompatible with the separation of powers and why this regime represents a threat to American liberty. Indeed, if Congress can vest total regulatory power in a single unaccountable agency head for the purposes of consumer protection law, we have every reason to fear that Congress might seek to create czars to govern other regulatory issues without oversight or political accountability.

Its important to note that the Supreme Court has previously affirmed the constitutionality of other “independent agencies” where the President has the power to appoint a governing board or commission but cannot freely remove board-members or commissioners once installed. For example, the National Labor Relations Board and the Securities and Exchange Commission are both independent agencies in this model. But CFPB is different in that it vests governing power only in a single person—meaning that there is no semblance of political balance, or any mechanism to moderate CFPB’s regulatory decisions.

The separation of powers doctrine protects individual liberties. Whereas an independent agency headed by a multi-member governing board offers minimal protections to moderate the agency’s decisions and conduct, there are no such protections with CFPB. This is a clear cut violation of the Constitution, and it represents a threat to the liberties of all Americans. The Court should not water-down separation of powers doctrine by allowing a single unaccountable agency head to exercise unchecked power. You can read our amicus brief in Selia Law here.

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