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President Trump's anti-regulatory push in the face of a major Supreme Court test

 


CFBP was created in 2010 during the aftermath of the 2008 financial crisis to protect consumers in banking, mortgage, credit card and other financial transactions.

But there is more at stake than the future of an agency. The new brief scheduled for oral argument Tuesday poses fundamental questions about how the government should be involved in people's lives and how far presidential power should extend.

A court ruling on the president's dismissal power could affect a multitude of independent agencies, including the Federal Trade Commission, the Federal Energy Regulatory Commission and the Federal Reserve Board. For more than a century, Congress has created such agencies within the executive with directors who can only be removed from office "for good". The director of the CFPB, for example, holds a five-year mandate and cannot be removed from office by the president, except for "ineffectiveness, negligence in office or professional misconduct".

The question for judges is whether this limitation of the president's power violates the constitutional separation of powers. The Trump Justice Department has declared that the configuration of the CFPB is unconstitutional. He is on the side of a California debt service company, Seila Law, whose practices triggered an investigation by the CFPB. Although the Department of Justice and Seila Law say the president should have more control over the CFBP, they differ on the fate of the entire agency. (The Seila law says it should be overturned; the administration would preserve it, but with more presidential control.)

Ultimately, the case could affect the regulatory power "of about one-third of the modern federal government," according to lawyer Paul Clement, who the high court appointed to defend the CFPB when the The Trump administration has chosen not to do so.

Larger themes

Through their past writings, the majority of Roberts Court judges have demonstrated that they share Trump's anti-regulatory focus.

The court increasingly discussed what Justice Neil Gorsuch, Trump's first representative on the Supreme Court, called "the explosive growth of the administrative state over the past half century."

Trump's 2020 message behind his attacks on Liberal Supreme Court justices

Federal agencies touch every part of daily life, Gorsuch observed in one case last year, "with tons of regulations" to which "agencies add thousands of pages of regulations each year."

But, as more liberal judges have pointed out, these regulations can clarify laws regarding the protection of people with disabilities, transportation safety, mine safety and other public concerns. The current case concerns an agency created after the 2008 financial disaster that burst the housing bubble, reduced retirement accounts and reduced household wealth. He exposed a multitude of predatory lending and underwriting credit practices.

The Trump administration and the most conservative judges assert a broad and concentrated authority in the presidency and avoid the limitations of its power to hire or fire executives.

When Now – Justice Brett Kavanaugh wrote an opinion as a trial judge against the CFPB in a separate dispute, he declared the CFBP "unconstitutionally structured".

"This is a case of executive power and individual liberty," he wrote in a 2016 opinion which was later quashed by the United States Court of Appeal. United for the DC circuit. "The executive power of the United States government to enforce federal law against individuals – for example, to initiate criminal and civil proceedings – is essential to the order and advancement of society, but at the same time a serious threat to individual freedom. "

To safeguard this freedom, writes Kavanaugh, the Constitution assigns full responsibility for executive power to the President, elected and accountable to the people.

The philosophical and practical issues of this case have prompted dozens of outside interests to weigh in.

"What a strange moment in our history for the Court to be ready to remove the main constraints weighing on the presidential power," wrote Deepak Gupta, former chief counsel for the CFPB, in a recent press release. SCOTUS blog article. Gupta, now in private appeal practice, also filed a "friend of the court" brief on behalf of the financial regulators supporting the CFPB.

Among the outside groups on the side of the Trump administration and Seila Law, the Californian firm engaged in debt services, is the Chamber of Commerce. Lawyer Andrew Pincus, representing the House, argued in a "friend of the court" brief that when Congress attempted to shield the office from political influence, it eliminated political responsibility.

Noting that the office has broad enforcement power, including the ability to lift civil penalties of up to $ 1 million per day, Pincus said that a structure "born of a dream of creating a European-style apolitical technocracy that would establish political consumer finance" has become "an American nightmare".

How the challenge reached the Supreme Court

Congress created the Consumer Financial Protection Bureau as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (named after its sponsors). Legislators wanted a streamlined agency to protect the interests of consumers in mortgages, credit and other consumer financial services.

Warren, then a law professor at Harvard, and others had originally proposed a multi-member board to oversee the office, but Congress ultimately decided on a single administrator. President Barack Obama has appointed the first director of the CFPB, Richard Cordray.

The current director, appointed by Trump, is Kathleen Kraninger. She agreed with Trump's position that she could be removed at will by the president.

The case of Seila Law v. CFPB started after the office started requesting documents and other information from Seila Law to determine if it was violating the federal telemarketing sales rule by illegally charging consumers an up-front fee for services. debt relief.

In fighting the implementing measure of the CFPB, Seila Law challenged the structure of the council. His lawyer, Kannon Shanmugam, told the judges that because the manager's configuration was unconstitutional, the entire agency was not valid.

"By creating the CFPB (…), Congress linked its very existence to its freedom from the President," he said in his written brief, adding that "Congress sought to prevent the president to exercise control over the CFPB ".

John Roberts & # 39; legacy will be forever intertwined with Trump

The Trump administration does not go as far, saying "that there is no reason to conclude that Congress would have preferred not to have an office at all rather than an office led by a director "whom the president could dismiss at will.

But like Seila Law, the administration takes a strong ideological position against independent agencies. Shanmugam and the Solicitor General of the United States, Noel Francisco, focus their arguments on the CFPB's single director structure, but both argue that the High Court would have reason to overturn a 1935 precedent that prevented the President from easily removing the five Federal Trade Commissioners.

Most independent agencies are managed by multi-member boards of directors.

Paul Clement back in court

Traditionally, the Department of Justice defends government agencies. When the administration opposes, as in this case, the Supreme Court appoints a lawyer to file a brief and plead for the government entity.

The choice of an external lawyer is usually made by the judge who supervises the emergency motions and other matters of the regional circuit which heard the case. Justice Elena Kagan, a liberal who oversees the 9th circuit in California, recommended Clement, a former US solicitor general in the Republican George W. Bush administration who has unassailable conservative powers.

This could weaken the momentum against the CFPB and other independent agencies. Clement enjoys respect on both sides of the bench and last week Chief Justice John Roberts publicly praised his 100th argument before the court.

In his court file, Clement argues that the dispute is not ripe for a decision because Trump did not try to remove the director, and if he did try, the current director said that She would gladly leave.

"This case involves an effort by the CFPB to enforce a request for a garden-type civil inquiry," wrote Clement, arguing that the execution measure had a tenuous link with the director's dismissal status. "(S) subsequent events have completely severed the link," he adds, noting that since the action against Seila Law was first filed by Cordray, a person named by Trump who believes that It can be easily removed has taken over.

If the court were to achieve constitutional merits, Clément adds, the Constitution allows Congress "to impose modest restrictions on the President's removal authority".

"No one can deny that Congress has imposed such restrictions on agencies for almost a century and a half, with the unanimous approval of this Court for 85 years," said Clement. "To change course now and to challenge much of the structure of the federal government would be an unprecedented decision in the history of precedents."

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