The Supreme Court declined Monday to hear a legal challenge to the structure of the Consumer Financial Protection Bureau, dealing a setback to conservative and industry critics of the agency and granting the regulatory agency more certainty over its future.
State National Bank of Big Spring, a Texas-based community bank, argued that the CFPB’s structure is unconstitutional. The agency gets funding from the Federal Reserve, rather than Congress, and has a single director who cannot be removed except for cause. Critics have argued that the set-up means the CFPB isn’t accountable to the president or to Congress.
The bureau, a brainchild of Sen. Elizabeth Warren, D-Mass., has been a political lightning rod since its inception. Warren’s nomination to lead the bureau was blocked, and the bureau has landed in headlines as much for fights over it as for its own enforcement actions or other activity.
In its denial, the Supreme Court appeared to affirm a ruling made last year in favor of the constitutionality of the CFPB’s structure by the D.C. Circuit of the U.S. Court of Appeals. That court rejected arguments against the CFPB’s structure made by PHH Mortgage Corp., a nonbank mortgage lender, in a ruling last January.
Justice Brett Kavanaugh, a former member of the circuit court, recused himself from the case. Kavanaugh dissented against the majority opinion in the PHH, arguing in his dissent that Congress overreached by designating a single director, rather than a commission, for the bureau.
