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Financial Services Committee Examines Constitutional Design of CFPB
Wednesday, March 22, 2017 6:40 AM

The U.S. House Financial Services Committee, Oversight and Investigations Subcommittee, held a hearing Tuesday to examine the constitutionality of the structure of the Consumer Financial Protection Bureau. The CFPB is headed by a single director who serves a five-year term and is funded outside of the congressional appropriations process through transfers from the Federal Reserve System.

Testifying before the subcommittee was Ted Olson, former solicitor general under Pres. George W. Bush and currently a partner in Gibson, Dunn & Crutcher LLP; Saikrishna Prakash, a James Monroe Distinguished Professor at University of Virginia School of Law; Adam White, research fellow with Hoover Institution; and Brianne Gorod, chief counsel of the Constitution Accountability Center.

Olson testified that the CFPB’s structure violated the premise of separation of powers by aggregating unaccountable power in the director of the agency. The agency is not accountable to Congress for its budget, and the president can remove the director only under limited circumstances. He recommended restoration of congressional control over the budget and presidential control of removal power.

White considers the constitutionality of the CFPB structure to be one of the most important issues facing Congress today. If it is found to be constitutional, it could create new benchmarks for future decisions and serve as a model for decades to come. He said the power of the purse is the most complete and effective shield of overreach.

Prakash studies the separation of powers and gave the subcommittee an historical perspective on Supreme Court rulings on the powers of the president. He said the power to manage executive appointments is vested in the president.

Unlike others appearing before the subcommittee, Gorod testified that the structure is not a constitutional issue. The Supreme Court has said Congress can shield heads of independent regulatory agencies, and it is common practice for regulatory agencies to be funded outside of the appropriations process.

Rep. Jeb Hensarling (R-Texas) is chairman of the Financial Services Committee. Rep. Vicente Gonzalez (D-Texas) serves on the Oversight and Investigations Subcommittee.

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or