How a Conservative Is Defending Obama's Consumer Protection Bureau

Paul Clement of Kirkland & Ellis. Photo: Diego M. Radzinschi/NLJ

A leading conservative U.S. Supreme Court advocate on Wednesday urged the justices to uphold the single-director independent design of the Consumer Financial Protection Bureau, arguing that Congress had authority to limit the power of the president to fire the agency’s leader.

The justices are set to hear arguments in the case Seila Law v. Consumer Financial Protection Bureau in March, and the dispute is widely viewed as a potential blockbuster in the constitutional law arena. The case is focused on a consumer regulatory agency long demonized by Republicans on Capitol Hill. The Supreme Court’s newest member, Justice Brett Kavanaugh, has assailed what he called the consumer bureau’s “massive, unchecked power.”

The Supreme Court selected Paul Clement of Kirkland & Ellis to defend the consumer bureau, after the agency itself and Trump’s Justice Department aligned with financial services companies and business advocates to back their arguments against the regulator. The Obama-era Justice Department had defended the agency, whose legacy stems from the Dodd-Frank financial industry reforms of 2010.

“First, and most obviously, there is no ‘removal clause’ in the Constitution,” Clement wrote in Wednesday’s Supreme Court filing. “Beyond the provisions for impeachment, the constitutional text is simply silent on the removal of executive officers, which is hardly a promising basis for invalidating an act of Congress.”

Federal law only allows the president to remove the bureau’s director for cause, not at will. The bureau’s director, who is now Kathy Kraninger, serves a five-year term. Critics of the agency have long argued the bureau’s director is too insulated from accountability. The agency is not set up like multimember federal shops—including the Federal Trade Commission and the U.S. Securities and Exchange Commission—with bipartisan leaders.

The appointment of Clement, who clerked for the late Justice Antonin Scalia, caught some legal observers by surprise. The veteran Supreme Court advocate and former U.S. solicitor general in the George W. Bush administration has widely championed business interests and conservative ideals in major cases in courts across the country. The Kirkland team working with Clement includes partners Erin Murphy and Matthew Rowen, and associate Andrew Lawrence.

The case involves the California-based debt collection firm Seila Law, which is represented at the Supreme Court by Kannon Shanmugam of Paul, Weiss, Rifkind, Wharton & Garrison. Seila Law is resisting a bureau investigation looking at whether the firm engaged in any anti-consumer practices involving the marketing, advertising and sale of debt-relief services.