by Keith Bradley
Who do you think is the most powerful individual in government, after the president? Some might say the Secretary of Defense, the Attorney General or the Chair of the Federal Reserve Board. According to a panel of the D.C. Circuit, it is actually the director of the Consumer Financial Protection Bureau. On that ground, the court in PHH v. Consumer Financial Protection Bureau has just held it unconstitutional that, under the Dodd-Frank Act, the director can only be dismissed for cause.
For those unfamiliar with the agency, it is the federal regulator of consumer protection in financial services—things like mortgage and credit-card lending, consumer reporting, debt collection, checking accounts, etc. The Dodd-Frank Act created the Bureau, inspired in large part by then-Professor Elizabeth Warren’s idea for a finance analog to the Consumer Product Safety Commission. The Bureau has a budget of about $480 million and just over 1,500 employees—a quarter or so as big as, say, the USDA’s Agricultural Research Service. The Bureau is certainly influential in its sphere; in a six-month period it reports securing $244 million in relief for consumers harmed by violations of federal consumer financial law. Yet, whether you think the Bureau is doing a good job or a bad job in the various areas it regulates, it is not immediately evident that its director is the second-most powerful official in the entire government.
The opinion’s rhetoric reveals that this panel lost its mooring to the Constitution. The judges’ concern was that the director has “unilateral power,” by which the court really meant that the director runs the Bureau by himself, not as part of a multi-member commission or board. A commission or board is superior, the court said, because it poses less threat to individual liberty. To be sure, the Supreme Court has observed that the separation of powers protects individuals as well as the rival branches. But individual liberty is not the Constitution’s only value. To assess the validity of the Bureau, the question is not simply how it affects liberty, but how it measures up against the actual framework of the Constitution.
To see the all-consuming importance of individual liberty to this D.C. Circuit panel, it will be useful first to run through the other justifications it offered.
First, the opinion professed to be suspicious because having a single agency head with for-cause protection is novel. Setting aside whether that mode of constitutional analysis is wise, the panel’s historical review was incomplete. The National Bank Act of 1864 established the Comptroller of the Currency and it permitted (and still permits) the President to remove the Comptroller only “upon reasons to be communicated . . . to the Senate.” Textually and in terms of effect, “upon reasons” seems pretty similar to a “for cause” limitation. Assessing this historical example would be important for any careful examination of whether for-cause protection for a single agency head is a novelty. The D.C. Circuit panel dismissed it in a footnote stating that the Comptroller is an at-will official—for which the court cited no precedent and provided no explanation.