In light of the Supreme Court decision, CFPB ratifies earlier agency actions

As established by the Dodd-Frank Act in 2020, the Consumer Financial Protection Bureau was headed by a director who could the President could remove only for cause (inefficiency, neglect of duty, or malfeasance in office). The CFPB’s first director was appointed on January 4, 2012. On June 29, 2020, the Supreme Court held in Seila Law LLC v. CFPB that the Act’s removal provision violates the separation of powers but that it is severable from the rest of the statute. As a result, the Court ruled, “The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.” (See earlier blog post, here.)

The Court did not address whether a prior action taken by the CFPB could be invalidated on the basis that the agency, when the action was taken, was led by a director unconstitutionally protected from removal. The Court remanded the case for the lower courts to decide that issue in the Seila Law case; other cases raise the same issue. In an effort to avoid litigation and “to resolve any possible uncertainty,” the CFPB today issued a notice ratifying a number of actions from 2012 through the date of the Court’s decision. The agency cited case law holding that an agency, through ratification, may “purge[] any residual taint or prejudice left over from” a potential defect in an earlier action. The notice states that it is ratifying the earlier actions “out of an abundance of caution” and that the notice is not a concession that the actions would not be valid absent ratification.

The CFPB’s notice, including the list of ratified actions, is here.

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