U.S. Supreme Court justices divided over challenge to consumer agency

U.S. Supreme Court justices on Tuesday appeared divided over a challenge backed by President Donald Trump's administration to the structure of a federal agency assigned to protect consumers in the financial sector in a case that could undermine its independence from presidential interference. The court, which has a 5-4 conservative majority, heard arguments involving the Consumer Financial Protection Bureau (CFPB) brought by a law firm investigated by the agency. Trump and his fellow Republicans have sought to undermine the CFPB, created by Congress under his Democratic predecessor Barack Obama in 2011 following the financial crisis.

The legal fight focused on whether the agency's director, a presidential appointee who serves a five-year term, has too much power because the president has only limited authority to remove that individual. The law firm has argued that this CFPB structure violates the U.S. Constitution's separation of powers provisions that vest executive authority with the president and limit the power of Congress to encroach in that area. Some conservative justices appeared sympathetic to the challengers but the court as a whole seemed conflicted over how to resolve the case. Several justices raised questions about the possible implications for other agencies and even the president's ability to remove members of his own Cabinet.

If the court were to issue a broad ruling giving the president more powers it could affect agencies like the U.S. Federal Reserve, a concern raised by liberal Justice Stephen Breyer. "What about the Fed?" Breyer asked.

Chief Justice John Roberts could be the pivotal vote, as he asked questions of both sides and indicated at one point that the president may already have sufficient authority over the CFPB. Roberts also questioned whether the CFPB has more power than other U.S. agencies because it receives guaranteed funding from the Fed and does not need congressional appropriations. Based on questions asked for the arguments, the court could end up issuing a narrow ruling that may not resolve the weightier constitutional issues.

Kathy Kraninger, named by Trump to head the agency, took office in 2018 over the objections of Democrats and consumer advocates. Orange County, California-based law firm Seila Law LLC has argued in the case that the entire agency should be struck down. The law firm lost in lower courts and appealed to the Supreme Court.

Under the 2010 Dodd-Frank Wall Street reform law that established the agency, the president can terminate a director only for "inefficiency, neglect of duty or malfeasance in office." Lawmakers wanted the agency to be independent from political interference. The challenge, one of several targeting the agency, was brought by Seila, which specializes in resolving consumer debt issues, in response to a 2017 request from the CFPB for information and documents as part of an investigation into whether the firm had violated federal consumer financial law.

The San Francisco-based 9th U.S. Circuit Court of Appeals ruled last year that the CFPB's structure is constitutional. Trump's administration and the current CFPB leaders agree with the challengers in the case. The Democratic-led House of Representatives intervened in the case in defense of the agency.

The ruling, due by the end of June, is likely to affect a similar challenge to the Federal Housing Finance Agency, also led by a single director.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)