On September 17, Consumer Financial Protection Bureau (“CFPB”) Director Kathleen Kraninger sent letters to House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell stating that the CFPB “has determined that the for-cause removal provision of the Consumer Financial Protection Act . . . is unconstitutional.” The Bureau now affirms that the for-cause removal provision unduly interferes with the President’s executive authority under Article II of the Constitution. This view is contrary to the position taken by the Bureau in litigation throughout its history, but consistent with the views of the President and Department of Justice (“DOJ”).
On the same day, the Bureau, through the DOJ, filed a brief in CFPB v. Seila Law, which describes the Bureau’s new position. The brief responds to Seila Law’s recent petition to the Supreme Court to review the constitutionality of the for-cause removal provision and urges the Supreme Court to grant the petition to resolve this issue. In the letters, Director Kraninger also stated that she has instructed CFPB attorneys not to defend the for-cause removal provision in lower courts, including in CFPB v. Nationwide Biweekly Admin., No. 18-15431 (9th Cir.), and Community Fin. Servs. Assoc. v. CFPB, No. 1:18-cv-00295 (W.D. Tex.), among other cases. However, Director Kraninger made clear that her determination “does not affect [her] commitment to fulfilling the Bureau’s responsibilities,” and, if the Supreme Court determines that the for-cause removal provision is unconstitutional, her view is that the rest of the Consumer Financial Protection Act would remain “fully operative.”