President Trump announced his recent nominee to the Supreme Court last night – it’s D.C. Circuit Court Judge Brett Kavanaugh. And that may be bad news for the CFPB.

Of course, any Supreme Court nominee picked by President Trump is bound to be controversial, but of all the candidates ostensibly considered by the President, the CFPB should probably be most concerned with Kavanaugh, who has already ruled that the agency is unconstitutional.

In the 2016 Circuit Court decision, PHH Corp. V. CFPB, Kavanaugh took issue with the unprecedented powers accorded to the CFPB director. As Kelly Knepper-Stephens explained at the time of the ruling, in order to be constitutional, administrative agencies have historically had a director who can be removed at-will by the President or have a multi-member board comprised of experts “appointed by law  and informed by experience” from both major parties.

The CFBP has neither and that could be dangerous, Kavanaugh wrote. “The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.”

The January 2018 en banc full court decision from the D.C. Court of Appeals, to the surprise of many, overturned the 2016 Kavanaugh’s decision and PHH opted not to appeal its case to the Supreme Court. (For a summary of the case timeline, see this.)

The insideARM Perspective

Kavanaugh’s decision will almost certainly come up during his confirmation hearings. The National Law Journal lists Kavanaugh’s 2017 PHH Corp v. CFPB ruling as one of a handful that will play a big role in Kavanaugh’s nomination process. And already, several prominent Democrats have taken issue with Kavanaugh specifically for his ruling on the CFPB, including Senators Elizabeth Warren (D-Mass) and Amy Klobuchar (D-Minn).

Will Kavanaugh, if appointed, cause trouble for the CFPB? He may, but his engagement with this subject might be more complicated than you would think. As The Washington Examiner notes, Kavanaugh could be obliged to recuse himself if any decision with which he was previously involved makes its way to the Supreme Court.


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