Congressional Hearing: The Bureau of Consumer Financial Protection’s Unconstitutional Design

House Financial Services Committee

Subcommittee on Oversight and Investigations

March 21st, 2017


  • The Honorable Theodore Olson, Partner, Gibson, Dunn & Crutcher LLP
  • Professor Saikrishna Prakash, James Monroe Distinguished Professor, University of Virginia School of Law
  • Adam White, Research Fellow, Hoover Institution
  • Brianne Gorod, Chief Counsel, Constitution Accountability Center

On March 21st the House Financial Services’ Subcommittee on Oversight and Investigations held a hearing to discuss the potential constitutional conflicts presented by the structure and mandate of the Consumer Financial Protection Bureau (CFPB.) The controversial subject drew attention from Democrats and Republicans alike, creating a tense environment with often partisan accusations of motive.

Chairwoman Ann Wagner (R-MO) began the hearing by discussing her perceived overreach of the federal government into the private financial decisions of everyday Americans. She continued by stating the unconstitutional manner of the CFPB is leading to abuse, stemming from its unaccountable independence and “arrogant” regulation of entities outside of its scope. Wagner concluded that the President should have the authority to remove the director of the agency to restore the checks and balance the Constitution was founded on. Ranking Member Al Green (D-TX) disagreed with Chairwoman Wagner and declared the hearing unilaterally sided with large financial companies who are regulated by the CFPB. Green was fervent in his disagreement in the panel hosting Theodore Olson, a former U.S. Solicitor General, who is representing PHH Corporation in a pending case against the CFPB. Representative Green spent a considerable amount of his allotted time on this issue, which he stated to be “inappropriate” for Congress to host an attorney involved in pending litigation.

Representative Scott Tipon (R-CO), Vice Chair of the subcommittee, added on to Chairwoman Wagner’s opening statement during his allotted opening time. He cited the CFPB’s fifty rules and enforcements as clear evidence of its incentive to act with impunity. He closed with a statement that the CFPB requires reforms to return the agency to its original mandate.

Three of the four witness began their opening statements by sharing their opinion that the CFPB’s structure is unconstitutional. Theodore Olson, who made clear he was testifying in a personal capacity, stated that the Constitution’s framers did not want power to be solely focused into one branch of government and thus formed the three branches. Currently, as written by the legislation that created the CFPB, the president is unable to remove the director unless there is due cause, which Mr. Olson inferred was stripping the president of his executive authority. He continued saying the CFPB’s power is so concentrated and unaccountable that it violates the intent of the framers and thus the Constitution.

Professor Saikrishna Prakash of the University of Virginia echoed Mr. Olson in his belief that the unaccountable nature of the CFPB director is contradictory to the president’s removal powers instilled in the checks and balances of the American system. Adam White of the Hoover Institution was the third witness to share his case against the CFPB’s constitutional status. His testimony focused primarily on the inability of Congress to use the power of the purse over the agency. He also urge lawmakers to enact a legislative fix and to not wait for the courts to complete litigation.

Brianne Gorod of the Constitutional Accountability Center was the only witness to argue in favor of the CFPB. Her argument rested on the structure being similar to existing agencies and that presidential removal power is not all consuming. She argued that if there were great abuses in the Bureau then the president would have the power to remove the director for cause and the independence of the Bureau from the president and legislature is a check and balance itself.

Chairwoman Wagner began the question portion of the hearing by stating her intention to support a legislative solution to the unconstitutional status of the CFPB but that she was also interested in the expertise of the panel on the issue. She questioned the witnesses on whether the president has the authority to remove the director at this moment. Mr. Olson responded that the Office of Legal Counsel had stated the responsibility of the President to enforce the constitution and his belief that the “president has the power to remove the director.” Professor Prakash and Mr. White agreed.

Throughout the hearing various congressional Republican Members made their opinion of the CFPB’s unconstitutional nature clear.  They inquired of the witness why the CFPB presented a conflict to constitutional law and referred to their intention to make changes to rule in the overreach the agency had imposed. Democratic Members repeated the statistics of the positive enforcing cases the agency has done in its efforts to protect consumers. Many repeated the argument that the only parties wishing to see the agency dismantled are large banks and companies who perceive the agency as a threat.

The Chairman of the full House Financial Services Committee, Jeb Hensarling (R-TX), reaffirmed his belief in the CFPB’s unconstitutionality. He cited the D.C. Circuit Court’s ruling that the single director nature of the agency is unconstitutional and inquired of the role of due process in the Bureau’s enforcement. Following Chairman Hensarling’ s appearance the hearing evolved into an exchange regarding the appropriateness of the hearing having Mr. Olson, an attorney who is current in litigation against the CFPB, testify and Ms. Brianne Gorod, who has assisted in an amicus brief in the same case in support of the CFPB. The hearing was adjourned shortly after by Chairwoman Wagner.


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