Richard Wolf | USA TODAY

USA TODAY

WASHINGTON – The Supreme Court agreed Friday to decide if the consumer protection agency that regulates banks and credit institutions should lose its independence.

The dispute pits the Trump administration against proponents of the Consumer Financial Protection Bureau, the brainchild of Elizabeth Warren when she was a Harvard law professor. The bureau was created as a response to the 2007-08 financial and mortgage-lending crisis

Passed over by President Barack Obama to lead the bureau in 2010, Warren went on to win election to the Senate from Massachusetts and is now leading the field for the Democratic Party's 2020 presidential nomination.

Beyond those political overtones, the case represents a classic separation of powers battle between the White House and Congress.

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act created the bureau with a single director who can be removed during five-year terms only for "inefficiency, neglect of duty, or malfeasance in office."

The Justice Department argues that President Donald Trump should have free rein to hire and fire at will.

"A single director can decisively implement his own views and exercise discretion without those structural constraints," Solicitor General Noel Francisco argued in court papers. "Vesting such power in a single person not answerable to the president represents a stark departure from the Constitution’s framework."

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Two federal appeals courts have upheld the structure of the bureau. The full U.S. Court of Appeals for the District of Columbia Circuit did so last year, but with the dissent of now-Supreme Court Justice Brett Kavanaugh.

"Independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. government," Kavanaugh wrote. "Because of their massive power and the absence of presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances."

The Supreme Court originally upheld the constitutionality of independent agencies in 1935, but critics contend that precedent only protects those with multiple commissioners or board members, not single directors.

The Obama administration and the board's first director, Richard Cordray, opposed any change in the agency's structure. But Trump and the board's current director, Kathleen Kraninger, disagree.

"A single-headed independent agency presents a greater risk than a multi-member independent commission of taking actions or adopting policies inconsistent with the president’s executive policy," Francisco said.

The Justice Department is urging the court to declare the single-director structure unconstitutional. The private company that initiated the case following a CFPB investigation wants the entire board invalidated.

"The need for review is beyond urgent," Kannon Shanmugam, the attorney representing Seila Law, which helps consumers in debt, told the court. "By the government’s own admission, the lingering legal doubt over the CFPB’s constitutionality casts a cloud over every action that the bureau takes."

Because the company and the government are on the same side, the justices will need to appoint someone to defend the agency's structure. The Democratic-controlled House of Representatives has volunteered.

"This case presents an issue of significant importance to the House: the constitutionality of the for-cause removal protection that Congress enacted to provide the CFPB director with a measure of independence," general counsel Douglas Letter wrote the court.

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