US Supreme Court to hear challenge to consumer finance agency

The US Supreme Court has agreed to hear a challenge to the Consumer Financial Protection Bureau in a case that seeks to undo the financial watchdog's independent structure.

The case, brought by California-based firm Selia Law, argues that the consumer protection agency created in the aftermath of the financial crisis has an unconstitutional structure because the director can only be removed for cause.

The firm has been under investigation by the CFPB and filed the lawsuit as it sought to fend off a type of administrative subpoena from the agency. Selia lost at an appeals court earlier this year, but has since received backing from the Department of Justice in the case.

Elizabeth Warren, the US senator and Democratic presidential candidate, spearheaded the creation of the CFPB by Congress as part of the 2010 Dodd-Frank banking reforms. The agency, designed to be independent, was a thorn in the side of big business and faced sustained criticism from Republicans.

Its activities have been sharply curtailed under Donald Trump. A victory for Selia in the case could open the door for a Democratic president to appoint a more aggressive director to the agency after the 2020 election.

Executive branch agencies in the US are typically headed by a single, Senate-approved official whom the president appoints and can remove for any reason. There are also a handful of independent agencies, which are headed by a board of commissioners who can only be removed for cause.

The CFPB combined these two features with a single director serving a five-year term whom the president could not fire at will. Conservatives have taken aim at this structure, arguing that it violates the constitutional doctrine of separation of powers by encroaching on the president's authority.

Brett Kavanaugh, the Supreme Court justice whose appointment last year by Mr Trump cemented a conservative majority on the high court, has previously made clear his views on the CFPB in a separate case when he was a federal appeals court judge.

In that case, he wrote an opinion stating that the provision in Dodd-Frank that protects the CFPB director from being fired should be removed, giving the president greater control over the agency.

Professor Adam Levitin of Georgetown Law, who previously served on the CFPB's Consumer Advisory Board, said: "Given the track record of the Trump administration, the Court might hesitate to give a president carte blanche control over all regulatory agencies."