Lawyer picked to defend CFPB before high court backs agency structure

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A former Republican solicitor general urged the Supreme Court to uphold the constitutionality of the Consumer Financial Protection Bureau, arguing that the framers gave Congress "considerable flexibility" in creating executive-branch agencies.

Paul Clement, a partner at Kirkland & Ellis and court-appointed defender of the agency in a landmark case challenging the agency's structure, filed a brief Wednesday with the court arguing that the CFPB’s single-director leadership structure does not violate the separation of powers.

"In sum, this case presents a remarkably weak case for invalidating an Act of Congress," wrote Clement, who was solicitor general under President George W. Bush.

In the lawsuit, a California debt collection law firm claims the Dodd-Frank Act gave a CFPB director too much power by allowing the president to remove the head of the agency only when there is cause.

Clement said the constitutional challenge is unnecessary under the agency's current leadership.

"There is no actual contested removal, and the current Director [Kathy Kraninger] views herself as serving at the pleasure of the President," he wrote.

The Supreme Court will hear oral arguments March 3. How the justices rule will determine whether a president has the discretion to fire the head of the independent agency without cause. Congress said the director can be removed only in cases of "inefficiency, neglect of duty, or malfeasance in office."

Clement laid out several reasons to uphold the status quo. First and foremost, he wrote, there is no "removal clause" in the Constitution.

"The constitutional text is simply silent on the removal of executive officers, which is hardly a promising basis for invalidating an Act of Congress," he wrote. "Decisions about how many executive departments to establish, which officers should discharge which duties, and which principal officers should supervise which inferior officers, were all left to Congress."

Second, he wrote, "modest restrictions" on the president’s authority "do not cross a constitutional line." Third, every time the high court has had to rule on restrictions to the president’s removal powers, "the vote has not been close," meaning the justices have upheld restrictions by Congress.

Clement also wrote that Seila Law, the California firm that challenged the CFPB's authority, did not suffer an injury that can be traced to the removal restriction. "A contested removal is the proper context to address a dispute over the President’s removal authority," Clement wrote.

Clement was appointed to defend the CFPB after the Department of Justice and Kraninger, a Trump appointee, told Congress in September that they backed a legal effort challenging the agency's constitutionality.

This article originally appeared in American Banker.
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Dodd-Frank Court cases Litigation Kathy Kraninger CFPB SCOTUS