(Reuters) – The United States Supreme Court on Monday granted President Donald Trump more authority over a federal agency responsible for protecting consumers in the financial sector, authorizing him to fire his boss as needed and decide the structure it was provided by Congress broke the United States Constitution.
The Court stopped a 5-4 decision shortly after the much more drastic solution to annul the Consumer Financial Protection Bureau, an agency set up in 2011 under Democratic former President Barack Obama, long criticized by President Trump and his fellow Republicans . The court ruled in favor of California-based law firm Seila Law LLC, which questioned the agency's structure after being investigated by it.
"The Office may therefore continue to operate, but its Director, in the light of our decision, must be removable by the President at any time," wrote John Roberts on behalf of the majority.
President Trump has tried to undermine the CFPB. Kathy Kraninger, who was appointed by President Trump as head of the agency, took office in 201
The legal battle focused on whether the director of the agency, a presidential candidate serving a five-year term, has too much power because the president has only limited authority to remove that person. The law firm had argued that this CFPB structure violated the Constitution's provisions on the separation of powers that exercise executive authority with the president and restricts the power of Congress to break into that area.
During the 2010 Dodd-Frank Wall Street Reform Act that established the CFPB, the president could terminate a board member only for "inefficiency, neglect of duty or misunderstanding in office." Legislators wanted the agency to be independent of political involvement.
Seila, who brought one of several similar legal challenges to the Office, lost in lower courts and appealed to the Supreme Court.
The law firm, which specializes in resolving consumer debt issues, sued in response to a 2017 CFPB request for information and documents during an investigation into whether it had violated federal consumer finance law.
San Francisco-based 9th U.S. Circuit Court of Appeals ruled last year that the CFPB's structure did not violate the Constitution.
President Trump's administration and current CFPB leadership agreed with the challengers in the case, though the administration's attorneys stopped arguing that the entire agency would be shut down. The democratically-led House of Representatives intervened to defend the Office.
The decision is likely to affect a similar challenge to the Federal Housing Finance Agency, also led by a single director.