WASHINGTON, D.C. – Consumer watchdog group Allied Progress blasted the U.S. Supreme Court’s ruling today that undermines the independence of the Consumer Financial Protection Bureau by allowing the President to fire the agency’s director for no reason. The high court’s split 5-4 decision in favor of the plaintiffs in Seila Law v. CFPB overturns the for-cause removal provision established over a decade ago in Dodd-Frank. Earlier this year, Allied Progress released an analysis that found 78 percent of amicus briefs filed in support of Seila were drafted by CFPB-regulated entities, GOP politicians who have taken campaign contributions from those CFPB-regulated industries, or think tanks and legal foundations funded by industry money or led by industry insiders.
“The Roberts-led Corporate Court strikes again, predictably siding with industry groups that have an axe to grind against the CFPB or a financial motive in seeing the agency weakened,” said Jeremy Funk, spokesman for consumer watchdog group Allied Progress. “The CFPB’s independence is what allowed it to be a powerful and effective advocate for consumers in the past, but the high court ruled that the agency should instead be guided by the political whims of the President.”
Added Funk: “Bottom line: this industry-backed case had nothing to do with what the Bureau is in a legal sense and everything to do with what it does, which is hold bad financial actors responsible while recovering billions of dollars on behalf of cheated consumers. Greedy banks, predatory lenders and other financial scammers won’t stop until the agency is fully dismantled.”
Today’s ruling sets up a scenario for an easily influenced President — such as the current one, who has allowed the administration’s consumer financial policy to be dictated by the highest bidder — to be able to fire a director on the spot for putting the interests of consumers ahead of the wishes of industry donors. While that is likely not something Director Kathy Kraninger is worried about — she has praised bankers for “really helping drive the agenda” — the decision undercuts the authority of future directors who are willing to take their responsibility to protect consumers seriously.
When Director Kathy Kraninger announced her refusal to defend the constitutionality of her own job, special interests including predatory lenders and banks smelled blood in the water. Among the Seila supporters was the Consumer Bankers Association, whose member banks have been ordered to pay hundreds of millions of dollars in CFPB enforcement actions. Another is Roni Dersovitz and his associated companies who were sued by the CFPB and the New York Attorney General for “allegedly scamming 9/11 heroes out of money intended to cover medical costs, lost income, and other critical needs.”