Supreme Court Fumbles AGAIN – This Time On Onerous Consumer Financial 'Protection' Bureau

P. Gardner Goldsmith | June 30, 2020
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Once more, John Roberts has sided with the majority of U.S. Supreme Court “Justices” to smother the original meaning of the very document that created the Supreme Court itself. This time, the majority was composed of “conservatives,” and the ruling has supposedly upset leftists in America, because, as a New York Magazine Intelligencer headline proclaims, the “Supreme Court Restricts Independence of CFPB, But Doesn’t Kill It.”

In fact, the ruling should upset anyone who asks politicians and judges in DC (who loudly, proudly, swear oaths that they will do so) actually to uphold and abide by the Constitution.

The question on Monday, in a case called “Seila Law LLC v. Consumer Financial Protection Bureau,” was whether the president – any president – has the power to remove the head of the Obama-era Consumer Financial Protection Bureau – a bureau ostensibly created to consolidate other “regulatory” agencies (which, often, hand out money and special favors like deposit insurance) dealing with banks, investment companies, and lending institutions.

Many leftists claimed that the “independence” of the bureau was at stake, because, heck, if a president can remove the head of the agency, then that head might tow the president’s line, and the agency might become “politicized.”

Clear-headed folks note that anything associated with the polis is, by definition, “political,” and that the CFPB is a federal creation, which means there is only one branch of the U.S. government that can execute the 2010 statute that created the thing – and that would be the EXECUTIVE BRANCH.

And this, in a roundabout way, is what the majority ruled, allowing for a president to remove the head of the bureau.

But, as is typical, in doing so, they kept standing a number of unconstitutional practices, statutes – including the statute that created the clearly unconstitutional CFPB itself – and previous erroneous rulings.

As Damon Root observes for Reason:

To reach that conclusion (in Monday’s “Seila Law” decision), the chief justice had to first grapple with Humphrey's Executor v. United States (1935), a far-reaching New Deal–era case in which the Supreme Court ruled unanimously that President Franklin Roosevelt lacked the authority to fire a commissioner of the Federal Trade Commission (FTC) over political differences.

You read that right. But, just to offer illumination on how little regard for the Constitution and logic that 1935 (and, by its deference to precedent, todays) Supreme Court majority displayed, here’s more, via Root:

The FTC ‘must, from the very nature of its duties, act with entire impartiality,’ wrote Justice George Sutherland. ‘It is charged with the enforcement of no policy except the policy of the law.’ Because it ‘cannot in any proper sense be characterized as an arm or an eye of the executive,’ Sutherland concluded, the agency ‘must be free from executive control.’

Which not only smacks, headlong, against the Founders’ rule of the Executive Branch executing constitutionally sound statutes that the Legislative Branch passes, it runs afoul of basic logic: if there are only three federal government branches, and the Executive Branch, supposedly tasked with executing statutes, does not have control over a federally created bureau, who the has that control? And how, therefore, could the legislation allowing for that bureau have been executed in the first place?

The FDR-era court never addressed that. In fact, they conjured out of thin air the idea that there could be some magical “other” arm of DC power – a new dimension of federal bureaucracy that can be created by federal legislation and put into operation by the Executive Branch, but then, could act on its own. And, in this way, the 1935 SCOTUS allowed for the continuation of the unconstitutional Federal Trade Commission and prevented a President from pulling members of its five-member Board of Commissioners.

So the media focus Monday has been on the “shocking” variation in how Justice Roberts and the “eeeevil,” (and supposedly conservative) “majority” differently view the FTC Board and the lone CFPB director. It’s a distinction, leftist supporters of the CFPB monstrosity imply, that the “conservatives” drew in order to give Donald Trump power to “weaken” this “important” consumer “protection” bureau, and a distinction that comes from the conservatives finding that a lone Director in charge of the CFPB gives one person “too much” power without some kind of Chief Executive check.

Isn’t that nice of the majority to decide for everyone?

Writes Root:

The answer lies in part in the fact that the FTC is run by a panel of five commissioners and, according to federal law, ‘not more than three of the commissioners shall be members of the same political party.’ The director of the CFPB, by contrast, does not share power with any such panel and is not subject to any such political constraints.

And, offered Roberts in the conclusion of his majority decision:

In our constitutional system, the executive power belongs to the President, and that power generally includes the ability to supervise and remove the agents who wield executive power in his stead. While we have previously upheld limits on the President’s removal authority in certain contexts, we decline to do so when it comes to principal officers who, acting alone, wield significant executive power. The Constitution requires that such officials remain dependent on the President, who in turn is accountable to the people.

Which sounds nice, but is internally inconsistent and doesn’t jibe with the Constitution in any way.

Simply put, as Americans of the Founding Era understood, the President is the "Chief Executive", AND he swears an oath to “protect and defend” the Constitution. The Constitution requires him to execute constitutional laws. But the President’s oath MANDATES that he NOT execute unconstitutional statutes. He has a sworn duty NOT TO, and one of the ways he can do this is to NOT FUND Executive Branch agencies created by Congressional legislation. Contemporary Americans saw a strange vestige of this when George W. Bush included “signing statements” when putting tax-funded pen to certain laws, saying that he would exercise his Executive Branch prerogative to not execute certain laws or aspects of them (or, also in his case, to continue operating in unconstitutional ways).

Which leads us back to the Monday “Seila Law” ruling, and the important conclusions.

The key to this is that Justice Roberts and the majority did not address the most fundamental point, which is whether, like the FTC and all other “regulatory agencies”, there is any provision in the Constitution allowing for the bodies to exist at all.

As NPR notes:

But the court did not go as far as the challengers had wanted, limiting the decision to the single-director structure of the CFPB. Roberts wrote: ‘The CFPB Director's removal protection is severable from the other statutory provisions bearing on the CFPB's authority. The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.’

While some Trump boosters might applaud, this is a classic dodge, and something that Justices Thomas and Gorsuch, although concurring with the determination that the Chief Executive has the power to remove a bureau director within the EXECUTIVE BRANCH, addressed separately to express their dissent.

There is a great deal to read in this “partial” dissent, but at the opening, they hint at the most fundamental of issues.

The decision in Humphrey’s Executor (1935) poses a direct threat to our constitutional structure and, as a result, the liberty of the American people.

The issue is not merely whether the President has control over Executive Branch agencies. The issue is whether the Constitution allows for their creation in the first place.

And the answer to that is clearly, “No.” The creation of these bureaus rests on what I have noted many times when writing on “federal regulation”: a misreading of the “Interstate Commerce” clause (Article One, Section Eight) of the Constitution. And, as I often stress, James Madison himself stated that to view the clause as granting power to “regulate” anything that goes over state borders, including the transactions in financial sector, is to invent a power that the Founders did not intend.

But don’t ever hope that the Supreme Court, or anyone in D.C., or even your state or local governments, will show the courage to admit that.