The Supreme Court ruled Monday that the director of the Consumer Financial Protection Bureau may be removed by the president for any reason, reversing the agency's foundational pillar that it should operate independent of presidential or congressional intervention.
The court in a 5-4 ruling said the current structure of the federal watchdog is "unconstitutional" without oversight from the executive branch. Previously, the CFPB director could only be removed by the president for "inefficiency, neglect of duty, or malfeasance in office."
Spearheaded by U.S. Sen. Elizabeth Warren, D-Mass., in the aftermath of the 2008 financial crisis, the bureau was granted broad jurisdiction to pursue and penalize businesses in the consumer financial product industry for practices it considered abusive, unfair or deceptive after passage of the Dodd-Frank Act.
Automotive finance experts have long insisted the bureau's reach was too broad under a single director. Celia Winslow, senior vice president of the American Financial Services Association, said the organization is pleased the nation's highest court reduced the "immense power" of the CFPB director.
"We continue to believe that the Bureau should be constructed as other regulatory commissions in Washington are," Winslow said in an emailed statement. "The association will continue to advocate for that structure, which would provide necessary consistency to the Bureau."
Alongside other trade associations and congressional members, AFSA pushed for a five-member, bipartisan commission structure at the bureau long before its actual founding, the group said in a blog post.