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Could President Trump Control the CFPB After He Leaves Office? (Updated)

The Consumer Financial Protection Bureau could be completely independent of the next occupant of the White House.


On March 3, the Supreme Court will consider a constitutional challenge to the Consumer Financial Protection Bureau, one of the federal government's newest independent agencies. In Seila Law LLC v. CFPB the Court will consider whether the multiple mechanisms used by Congress to insulate the CFPB from executive control go to far.

Like other independent agencies, the head of the CFPB may only be removed for cause ("inefficiency, neglect of duty, or malfeasance in office"), and is slated to serve a set term of five years. Unlike most other independent agencies, the CFPB is headed by a single director, instead of a multi-member commission or board, and is not dependent upon Congressional appropriation for its funding. Instead, the CFPB is empower to request whatever funding is "reasonably necessary to carry out" it substantial responsibilities from the Federal Reserve.

The question for the Court in Seila Law is whether this suite of insulating measures, combined with the CFPB's broad regulatory and enforcement authority, renders the agency unconstitutional (and, if so, whether this requires overturning some prior Court precedents, such as Humphrey's Executor).

As it happens, the Trump Administration has concluded that the CFPB is unconstitutional as structured, and the Department of Justice has filed a brief on the side of the petitioners. The Court thus appointed former Solicitor General Paul Clement as amicus curiae to argue in defense of the CFPB's current structure.

Kathy Kraninger is the current Director of the CFPB. She took office in December 2018. Assuming she completes her term, she would remain in office until December 2023, without regard for who wins the next Presidential election. That is, if the CFPB's current structure is upheld, Kraninger could serve as CFPB Director for the first three years of the next presidential term, whether we have President Trump, President Sanders, President Bloomberg, or someone else.

The current structure of the CFPB would also give the Trump Administration the ability to prevent its successor from controlling the agency for a full presidential term. Consider the following scenario: If the Supreme Court upholds the CFPB (or is able to avoid the underlying constitutional question), and President Trump is defeated in November, Trump could prevent the next president from appointing their own CFPB director by replacing Kraninger in December 2020 with someone who would be entitled to serve through December 2025.

Could this really happen? Well, Director Kraninger has already concluded that the President may remove her at will, so I suspect she would resign if asked by the President, even if the Supreme Court upholds the CFPB. As a Trump appointee, she may also like the idea of preventing a successor from undoing her work. As for confirmation, I don't think there's much doubt that Senate Majority Leader Mitch McConnell would be happy to confirm a last-minute replacement in a lame-duck session of the Senate. Note also, such an appointment could not be filibustered, as there is no longer a filibuster for presidential appointments.

Whatever the Court's ultimate judgment on the CFPB's constitutionality, this scenario illustrates how Congress created the opportunity for Presidents to engage in strategic behavior to preserve agency control beyond their time in office—and President Trump could use this power to prevent a Democratic successor from influencing the CFPB long after he has left office.

UPDATE: One reader asks whether a new CFPB Director confirmed in December 2020 would simply serve out the remainder of the existing term. I suppose that's possible, but the relevant statutory provisions simply say that the Director "shall serve a term of 5 years" and make no provision for a replacement serving for a shorter period.

Another aspect of the CFPB I should have noted is that if the CFPB Director's term expires, they do not necessarily leave office. Rather, the statute provides that the existing director "may serve as Director after the expiration of the term for which appointed, until a successor has been appointed and qualified." This means that if the Senate is not controlled by the President's party, a CFPB Director appointed by a prior president could remain in office indefinitely. In other words, even if President Trump did not replace Kraninger, if Republicans control the Senate, Kraninger could remain as Director of the CFPB well after the expiration of her term, and there would be little the White House could do about it. A Democratic-controlled House could not even attempt to use Appropriations to force her out as the CFPB is not dependent upon Congressional funding for its operations.