The CFPB is the most independent of independent agencies, with power to make rules, enforce them, adjudicate violations in its own administrative hearings, and punish wrongdoers. And yet a single director heads the agency, one who can be removed only “for cause” — malfeasance rather than, say, a change in presidential policy priorities. The CFPB doesn’t even need Congress to approve its budget, because its funding requests are rubber-stamped by another agency insulated from political control: the Federal Reserve. The CFPB has regulatory authority over 19 federal consumer-protection laws. This concentration of power in the hands of a single, unelected, unaccountable official is unprecedented and cannot be squared with the Constitution’s structure, or with its purpose of protecting individual liberty from government overreach.
The Constitution created three co-equal branches keeping one another in check to promote liberty and prevent any single person or entity from growing too powerful. During the 20th century, however, the federal government began creating “independent agencies,” typically headed by multiple commissioners appointed by the president; think of the Securities and Exchange Commission or the Federal Communications Commission.
The Supreme Court has held such multi-member commissions to be constitutional, but most of these agencies include various other mechanisms to check their powers, such as staggered terms (meaning that a new president cannot replace the whole commission at once, but can fill some seats on it); limitations on how many members of a given political party may sit on the commission at a time; and a multi-member structure through which the commission discusses potential actions and moves forward only with a majority or consensus decision.
Then Congress created the new type of agency that is the CFPB. Without multiple leaders to appoint, there can be no staggered terms, no partisanship restriction, and no discussion among commissioners.
Woodrow Wilson would have smiled, but hopefully the Supreme Court won’t.