Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Supreme Court Rules That The Structure Of Key Independent Agency Is Unconstitutional


The Supreme Court ruled today that the structure of the Consumer Financial Protection Bureau is unconstitutional. The bureau has been an ideological battleground in Washington ever since its creation after the 2008 financial crisis. This latest ruling strips the bureau of some of its independence but does not completely dismantle it. NPR's Chris Arnold is here to explain.

Hi, Chris.


SHAPIRO: So tell us what the Supreme Court ruled.

ARNOLD: Well, in a 5-to-4 decision, the court sided with industry and the Trump administration, which had argued that the CFPB had too much power, basically, and was too independent. And a big part of that was because it has a single director overseeing it who even the president cannot fire without cause. And the court ruled that, well, that is unconstitutional. And so that in a sense is a victory for the administration. But the court left intact the rest of the statute that created the agency, so the Consumer Financial Protection Bureau survives to go on and do its work another day here.

SHAPIRO: So the CFPB goes forward. What actually changes as a result of this ruling?

ARNOLD: Well, there was a lot at stake here. I mean, the bureau is the nation's most powerful financial watchdog agency. It was created by Congress after the financial crisis. And its mission is to protect Americans from predatory practices by financial firms. And it's kind of famous now for being the brainchild of Elizabeth Warren. Of course, she's now a Democratic senator. Democrats largely embraced it. Many Republicans and conservatives have hated it, said it was too powerful and it unfairly targets financial firms. And a very important part of it is that this decision could have been a lot worse for the bureau.

SHAPIRO: What would that have looked like?

ARNOLD: Well, the court could have ruled that the whole agency was unconstitutional because of these problems, and that was considered a much less likely outcome. But it was possible. I spoke to Richard Cordray today. He's the former director of the agency and its first director. To him, this ruling is a relief.

RICHARD CORDRAY: Financial industry companies wanted to try to invalidate the agency as a whole. Nobody on the court was willing to go that far today, and now definitively this challenge has been addressed, and the agency will continue to function with all of its full powers.

ARNOLD: And we should say Elizabeth Warren tweeted today, quote, "the CFPB is here to stay."

SHAPIRO: So what are conservatives saying today that people who've been wanting to see the powers of the CFPB reined in?

ARNOLD: Well, many are happy with the part of the ruling that the president can remove the director for whatever reason. I mean, they just saw this as a fundamental issue that this agency had too much power, so they like that. But they're not celebrating too much. Jonathan Adler is a professor at Case Western Reserve University law school. Here's what he had to say.

JONATHAN ADLER: The CFPB still has an awful lot of power and is still quite insulated from political oversight, particularly because Congress doesn't control the purse strings.

ARNOLD: What he means there is that the budget is managed through the Federal Reserve. Other industry groups also would like to see the single director replaced by a board of directors. But any of that would take an act of Congress, and with Democrats controlling the House, that's extremely unlikely to happen. So any additional big changes seem pretty unlikely at this point.

SHAPIRO: The current director of the bureau was nominated by President Trump. So what happens in light of this ruling if Biden wins the election?

ARNOLD: Well - and this is sort of an irony in all this, that this case has been in the works so long that, I mean, this is back when Cordray was there and now he's off the job. Republicans put in place directors who've arguably been much more pro-business. So without this decision, if Democrat Joe Biden were to go on and win the next election, he'd have to leave the current director there, the Trump appointee, for years. But now because of this decision, he could remove the current director and nominate someone who might be, you know, much more aggressive in policing the industry.

SHAPIRO: NPR's Chris Arnold on today's Supreme Court ruling.

Thanks, Chris.

ARNOLD: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.