On September 17, 2019, CFPB Director Kraninger notified House Speaker Pelosi, and Senate Majority Leader McConnell that the CFPB determined the for-cause removal provision of the Consumer Financial Protection Act of 2010 (“the Act”) is unconstitutional. The same day, a brief was filed in the Seila Law, LLC v CFPB (the “court filing”) matter currently pending before the Supreme Court making the same statement.

Will the legal debate surrounding the CFPB’s constitutionality be settled by Director Kraninger’s letters and the court filing?  While this statement settles part of the debate, a question remains regarding what should happen to the rest of the Act; can the removal for-cause provision simply be severed from the remainder of the statute, or will doing so effectively re-write the statute and therefore the only remedy is to strike the Act in its entirety?

In both letters and the court filing, the CFPB takes the position that this determination should not affect the CFPB’s ability to carry out its mission; citing the severability provision of the Dodd-Frank Act and stating that, “the remainder of the Act…shall not be affected thereby.” This isn’t a new position or one that has been adopted by all courts.

This question has been at the crux of legal debate for several years, and the Supreme Court has not yet opined on the question, however, Director Kraninger’s letters and the court filing appear to be a step closer to reaching a resolution of this debate.