How independent federal agencies can resist attempts to quash them …..

This is a continuation of a discussion based on my summary of an article posted on The Hill along with words of wisdom from law professor and Bloomberg columnist, Cass R. Sunstein

Partisan pressure from Congress for the President-elect to discharge the Consumer Financial Protection Bureau (CFPB) Director Richard Cordray would be wrong in both law and ethics.  Here is a summary of why this action would be wrong under the law.

First, a little background about agencies. Federal agencies are structured in a way that some are set up at the pleasure of the President, while others are set up independently.  A Supreme Court decision in 1935 also gave Congress the power to create independent agencies. The CFPB is an independent agency.  

As a result, any action by the President to discharge the director of the CFPB would be acting beyond his constitutional authority.  Director Cordray could seek a judgment from the court and win.

However, there has already been an attempt to undermine the CFPB and its director, focusing on the fact of it being headed by a single person  instead of the more typical multi-member panel, as well as its importance in the economy and the threat this is seen to present.  A decision by a panel of judges of the U.S. Court of Appeals for the District of Columbia recently ruled against the CFPB.  The decision is under review by the full court and expected to be reversed. So at this point in time the President-elect is bound by the current law.

The other argument that could be used under the current law to try to remove Director Cordray is for good cause.  Good cause entails something resembling acts of “inefficiency, neglect of office, or malfeasance of office”. As discussed in my previous summary this would be outrageous. The court of first instance has already found Director Cordray to be “a man of substantial accomplishment and of longstanding and dedicated devotion to public service and the public good.”

Sunstein takes the discussion further by mentioning other ways the new administration could undermine the CFPB and its director. This could involve challenging the agency’s powers in court by having it make a ruling that the Constitution does not allow Congress to create independent agencies or by having the Director communicate with the president directly before attempting to implement any extensive regulations.

It will be interesting to see how this all plays out in the coming months.


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