Supreme Court Holds That CFPB's Structure Is Unconstitutional

On June 29, the Supreme Court issued its long-awaited opinion in Seila Law LLC v. Consumer Financial Protection Bureau, finally resolving the question that has dogged the new agency since its inception: Is the leadership structure of the Consumer Financial Protection Bureau (CFPB) constitutional? Writing for a 5-4 majority, Chief Justice John Roberts ruled that the CFPB structure-"an independent agency that wields significant executive power and is run by a single individual who cannot be removed by the President unless certain statutory criteria are met"- violates the Constitution's separation of powers.

For financial services companies regulated by the CFPB, the most important aspect of Seila Law is not the headline constitutional defect, but the remedy. Choosing "a scalpel rather than a bulldozer," the Court did not invalidate the CFPB. The Court held 7-2 that the Director's constitutionally offensive removal protection could be severed from the CFPB's other