Corporate Accountability

Consumer Financial Protection Bureau v. All American Check Cashing, Inc.

In Consumer Financial Protection Bureau v. All American Check Cashing, Inc., the United States Court of Appeals for the Fifth Circuit considered a constitutional challenge to the leadership structure of the Consumer Financial Protection Bureau, an agency created in 2010 to protect consumers from harmful practices of the financial services industry.

Case Summary

The 2008 financial crisis decimated the American economy and caused millions of families to lose their homes. After months of evaluating the roots of this crisis and the types of reforms needed, Congress concluded that a major culprit was the failure of a fragmented and unaccountable consumer financial protection regime to safeguard homeowners from reckless financial products. To remedy this, Congress established a new agency, the Consumer Financial Protection Bureau (CFPB), that would have the independence and mission focus needed to prevent a recurrence of those problems and respond to the challenges of an evolving financial marketplace. Congress structured the Bureau to be led by a single director, rather than a multimember commission, to avoid the gridlock and delay to which commissions are susceptible. And to insulate the Bureau from industry pressure and political interference, while ensuring accountability, Congress provided that its director may be removed by the president for good cause (“inefficiency, neglect of duty, or malfeasance in office”) but not for policy disagreements alone.

CAC filed a friend-of-the-court brief on behalf of current and former members of Congress who helped enact, or otherwise are familiar with, the 2010 Dodd-Frank Act that created the CFPB. In our brief, we first explain that the Constitution gives Congress broad power to shape the structure of federal agencies and to give their leaders a degree of independence from presidential control. As we show, the Framers deliberately provided such flexibility to Congress so that future lawmakers could respond effectively to new and unforeseen national crises. Our brief then describes how Congress exercised this discretion after the devastating financial crisis of 2008, making a considered decision that an independent Bureau led by a single director could best combat the types of consumer financial abuses that caused the near-collapse of the American economy. Finally, our brief demonstrates that Congress had every right to make this choice: the Supreme Court has long recognized that the heads of regulatory agencies may be shielded from removal at will, and the CFPB is materially indistinguishable from the agencies addressed in the Court’s prior decisions. Thus, the Bureau’s leadership structure is constitutional.

On March 3, 2020 the Fifth Circuit held that the CFPB’s leadership structure is constitutional. The court recognized, as we emphasized in our amicus brief, that the Constitution gives Congress broad power to shape the structure of federal agencies. The court also recognized that by giving the Bureau a single director, Congress increased rather than diminished accountability by placing “responsibility, public scrutiny, and political pressure on the shoulders of one individual.”

Case Timeline

  • September 17, 2018

    CAC files amicus brief

    5th. Cir. Amicus Brief
  • March 12, 2019

    The Fifth Circuit hears oral arguments

  • December 4, 2019

    The Fifth Circuit hears supplemental oral arguments

  • March 3, 2020

    The Fifth Circuit issues its decision