On September 20, 2019, Allyson Baker was quoted in Law360 regarding the Consumer Financial Protection Bureau's (CFPB) recent conclusion that its single-director independent structure may be unconstitutional.
According to the article, the CFPB is urging the U.S. Supreme Court to hear a case challenging the legitimacy of its structure, taking aim at a provision in the agency's governing statute that prevents the U.S. president from firing its director except for cause. CFPB Director Kathy Kraninger has directed the agency's attorneys to refrain from defending the for-cause removal provision in the lower courts.
According to the article, the CFPB's flip-flop and looming prospect of a high court ruling stand to change the calculus that the agency and companies face during investigations and enforcement actions.
"You may see more companies willing to roll the dice and not comply with the CID or not go along with an enforcement action," Baker said. "That will probably be the biggest publicly visible impact of all this."
In turn, the CFPB may feel pressure to avoid court fights and dial back confrontation with companies during examinations and investigations. A similar logic could alter the trajectory of rulemaking at the CFPB, which is currently in the middle of several major projects. Baker said the agency may in the near term prove especially concerned with crafting rules that don't court controversy.
"I think they'll be a lot more cautious about how far out they go because the people most likely to challenge their rules are going to be industry trade associations," Baker said. "You want a rule that regulates the markets fairly and adequately. But you also want a rule that nails down any potential loophole or question, especially if you've got this [constitutionality] issue looming out there. That could slow it down a little bit."