By ruling against CFPB’s structure, SCOTUS ironically paves weigh for big structural change

The Supreme Court just handed down Seila Law, a decision striking down the Consumer Financial Protection Bureau’s independent governing structure. Ironically, this paves the way for the next administration to push big structural change. A brief thread (scotusblog.com/case-files/cas…)

As Rep @katieporteroc explains in this @WeDemandJustice webinar, Congress explicitly set up the structure of a single head, serving 5 year terms, with the aim of allowing both independence and speedy redress for consumers cheated by financial firms.

True, multi-member bipartisan commissions are the norm in government. But they’re also slow to act. Exhibit: the Federal Elections Commission, which is evenly divided between the parties and mired in gridlock. (abc13.com/fec-commission…)

As Justice Kagan writes in her dissent, this type of innovation is necessary to maintain an administrative state that can respond flexibly to new situations.

Chief Justice Roberts, writing for the 5–4 conservative majority, was having none of it. By his reading, the Constitution’s vesting clause requires that the president be able to fire all executive branch officers at will or at least those that preside over single-member commissions like the CFPB. The absence of a limiting principle here was noted both in the Kagan dissent and Thomas concurrence. After all, if the president needs to have a unitary executive staffed solely by his people, then what makes the FTC or Fed constitutional? Roberts tried to suggest a test, but as Kagan notes, other single-member commissions like the Social Security Administration are at least as important.

Thomas (who was joined by Gorsuch) are eager for precisely such rethinking of the entire administrative state.

But the opposite outcome is also possible under the Roberts decision.

This is where the irony comes in. A President Joe Biden will be able to — on Day One — install a Katie Porter as head of the CFPB and immediately begin regulating aggressively. And given that absence of a limiting principle, it’s not clear he couldn’t do the same at other agencies like the FTC. Indeed, the whole line of jurisprudence goes back to a case where FDR wanted to fire members of the FTC that disagreed with him. An earlier SCOTUS disagreed. We may be able to thank Roberts and Thomas for finally delivering on FDR’s governance vision! In a further irony, the Supreme Court may be pushing us more to the Brazilian model under the social democratic administration of Lula da Silva, who sidelined independent agencies in service of developmental goals. This is what scholars @MMotaPrado and @fafner100 call the “developmental administrative state” or “regulatory state with dirigiste characteristics.” (papers.ssrn.com/sol3/papers.cf…) That — combined with the Supreme Court’s recent blessing of basically unlimited emergency powers in the case over national security tariffs — is a green light for an aggressive Green New Deal. (thehill.com/policy/finance…)

Finally, it’s worth noting that the effective neutering of an independent CFPB — along with the watering down of the Volcker rule — means that we’re nearly back to the pre-financial crisis status quo ante. (dealbreaker.com/2020/06/volcke…) Progressives wanted a lot more than they got in Dodd-Frank and the Obama administration’s other actions, including prosecutions of Wall Street. Having a body that tries to shield consumers from the worst types of financial sector malfeasance is literally the least you could do. Now that we don’t have that, expect to see advocates pushing for the corner solutions. Think prosecutions, think big dumb rule like interventions (to coin @lindsey_brink) that will break big banks apart.

Indeed, independent agencies are a fairly neoliberal way to govern in the first place. They tend to be created after a political decision has been made to let the private sector predominate a field of activity, and then a bandaid is needed to guard against the worst outcomes. If these structures become unavailable, the Court’s logic pushes us to heavier handed interventions.

(Adapted from this thread.)