The U.S. Justice Department argued Friday that the Consumer Financial Protection Bureau should be stripped of its independence, a reversal of an earlier stance that the president only had the power to remove the Obama-era agency’s director for cause, not at will.
Justice Department lawyers told a Washington federal appeals court that the CFPB’s single-director design “lacks those critical structural attributes that have been thought to justify ‘independent’ status for multi-member regulatory commissions.”
“Moreover, because a single agency head is unchecked by the constraints of group decision-making among members appointed by different presidents, there is a greater risk that an ‘independent’ agency headed by a single person will engage in extreme departures from the president’s executive policy,” the Justice Department said in a friend of the court brief.
The full U.S. Court of Appeals for the D.C. Circuit is preparing to take up the constitutionality of the consumer bureau, an agency that Republicans and financial companies have long criticized as a rogue regulator that too often stretches outside its jurisdiction.
A divided three-judge panel in October, led by Brett Kavanaugh, found the “massive, unchecked” power of the director unlawful in October. The full appeals court later wiped out the panel decision in PHH Corp. v. CFPB, setting the stage for new argument on May 24. The case has attracted significant attention from pro-business groups, consumer advocates and state attorneys general.
Before Friday, the Justice Department had urged the full D.C. Circuit to review the panel’s decision but had not taken a position in the case on whether the president should be able to fire the CFPB director at will.
In an unrelated CFPB case in the Washington trial court, the Justice Department, under the leadership of then-Attorney General Eric Holder Jr., had defended the CFPB. The department said in that case that restrictions on the president’s authority to remove the agency director were lawful.