The U.S. Supreme Court issued a 5-4 ruling that the President has the authority at will to remove the Director of the Consumer Financial Protection Bureau.

On Monday, 29 June, the U.S. Supreme Court ruled that the Consumer Financial Protection Bureau (CFPB) could continue operating, but that the Director can be removed at will by the President. The 5-4 ruling, written by Chief Justice John Roberts, cited that the Director could be removed only for causes that violate the separation of powers rule under the U.S. Constitution, such as inefficiency, neglect of duty, or malfeasance.

The CFPB was established by the U.S. Congress as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Act consolidated many of the regulatory and oversight functions regarding consumer loans and other financial products previously regulated by several other federal agencies. The Bureau was structured as an independent agency with much of its power instilled in its single Director, who must be confirmed by the Senate to serve a five-year term.

The Trump administration as well as a California-based law firm being investigated by the CFPB for misleading financial practices challenged the CFPB’s independent structure, claiming that the limits on the President’s power to remove the head of the Bureau was unconstitutional. The Supreme Court’s decision affirms this argument, with Roberts writing “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."

The decision by the Supreme Court ends a five-year legal battle over the constitutionality of whether the President has the authority to remove the CFPB Director. Past regulations and rulings of the Bureau will continue to stand.