In the years leading up to the 2008 financial crisis, financial institutions targeted communities of color with expensive and risky subprime mortgage products. Hundreds of thousands of Black and Hispanic families were charged more for mortgages than their white counterparts or steered into expensive subprime loans, even though they qualified for cheaper prime loans. Over time, financial institutions like Countrywide pushed these “toxic” loans on more and more homeowners and expanded subprime lending throughout the country.1 When the music finally stopped in 2008, millions of families lost their jobs and their homes, and nearly $11 trillion in household wealth was wiped out.2 Over the next two years, Congress would work to pass financial reform legislation that was designed to address a variety of risks and dangers in the financial markets.
In 2007, then-Professor Elizabeth Warren proposed a federal agency to regulate consumer financial products.3 For years, Warren had criticized predatory “tricks and traps” in mortgages, credit cards, and other financial products.4 One-off, piecemeal reforms had failed, and Americans were drowning in debt.5 Increasingly, one bad medical diagnosis or the loss of a job would mean bankruptcy and a family’s total economic devastation. Warren argued that other consumer products, like toasters, were regulated at the federal level.6 Financial products were not so different. By 2009, Congress and the President picked up Warren’s proposal, and they made it one of the central parts of the coming financial reform package.7
That is when the opposition kicked into gear. For the next decade, opponents of the Consumer Financial Protection Bureau (CFPB) waged an all-out war against the agency, dumping millions of dollars into efforts to stop the agency from coming into being.8 When they failed to prevent its creation, they switched gears to slow its functioning. And when the Trump Administration gained control of the CFPB, it began to dismantle the agency from the inside.9 As with the Affordable Care Act, this Obama Administration achievement faced a sustained and relentless assault on its very existence.
A reader of Seila Law LLC v. Consumer Financial Protection Bureau,10 however, would have little sense of the bruising, bare-knuckle, decade-long fight over the agency. Instead, the case presents itself as posing a relatively straightforward, albeit novel-on-the-facts, separation of powers question: Is it constitutional for Congress to create an agency headed by a single director who is insulated from presidential removal, except in cases of “inefficiency, neglect of duty, or malfeasance in office”?11
A summary is simple: In 2017, the CFPB issued a demand for Seila Law LLC to produce information on its business practices, as part of the agency’s investigation of the law firm for violating telemarketing laws.12 Seila refused, arguing that the CFPB single-director structure with for-cause removal violated the separation of powers.13 The CFPB filed suit to enforce its demand.14 Writing for three Justices, with two others concurring in the judgment, Chief Justice Roberts agreed with Seila and found the agency’s design unconstitutional, in the process setting up a framework that appears to allow Congress to condition removal from office for members of multimember commissions but not for single-director agency heads.15 At the same time, the Chief Justice wrote for seven Justices that the CFPB’s for-cause removal restriction was severable from the rest of the statute and that it alone would be struck16 — leaving the agency in place but now with a presidential removal threat looming over its director.
Justice Kagan dissented from the constitutional analysis, along with the three other liberal Justices. In an opinion filled with sharp, cutting language, Justice Kagan protested that there was nothing neutral about the majority’s reasoning or its unitary executive theory of the separation of powers. She systematically argued that “constitutional text, history, and precedent invalidate the majority’s thesis.”17 Justice Kagan even accused the majority of “gerrymander[ing]” their “made up” rule to strike down the CFPB’s independent structure.18 For a separation of powers case, this was about as bloody a fight as it gets.
Seven Justices agreed that the CFPB can continue to regulate financial products, so long as its head is removable at will by the President. Seila, the law firm, is likely still subject to the investigatory demand because the Trump CFPB, now with a removable director, says it has ratified that demand.19 And Seila, the case, means that if Democratic nominee Joe Biden wins the White House in November, he can fire the Republican-appointed head of the CFPB and install a pro-regulatory appointee. Given that this was one of the marquee cases of the 2019 Term and that the decision broke 5–4 along ideological lines, these are hardly epochal consequences.
Supreme Court cases are often seen as “political” because the first-order effects of the decisions have self-evident political, partisan, or ideological consequences. Bush v. Gore20 chose a President. NFIB v. Sebelius21 could have overturned a President’s namesake healthcare initiative. This Term’s cases on abortion22 and the President’s taxes23 have obvious “political” valence. On an initial glance, Seila is different. The first-order consequences of the decision are not self-evidently political. The decision does not invalidate the Consumer Financial Protection Bureau as a whole or strip it of any substantive powers. It does not favor the Trump Administration, as President Trump already has his handpicked head of the CFPB in place. It does not favor Republican Presidents over Democratic ones in some more systematic way either: Presidents of either party could fire the head of the CFPB upon taking office and nominate a new one. Indeed, even if Seila is a step toward overturning removal conditions altogether — making commissions like the FTC and FCC less independent — it is not clear that the first-order effects of that rule are “political” either. Republican and Democratic Presidents alike might use their unitary executive power of removal to fire ideologically misaligned commissioners and choose ones more to their liking.
My aim in this Comment is to offer something of a Rashomon24 of Seila to try to explain why Seila was so hotly contested, why it is a marquee case, and why it might be considered a “political” decision — in spite of the symmetrical first-order effects and limited consequences for the Consumer Financial Protection Bureau.25 Throughout this Comment, I use the word “political” in different ways, in order to explore how a case can be “political” beyond obvious first-order electoral consequences (as in Bush v. Gore) or policy consequences (as with NFIB v. Sebelius).
The first story is of how Seila itself came to be. It is not entirely clear why Seila was brought to the Supreme Court. After the Court’s 2010 decision in Free Enterprise Fund v. Public Co. Accounting Oversight Board,26 it was predictable that the Court would likely hold that the remedy for an unconstitutional removal provision was simply to strike it and leave the agency in place. So why bring the case if recovery was unlikely? Part I provides the policy context for Seila, outlining the origins of the CFPB and the decade-long fight over its existence. This context shows how the financial industry, political leaders, and others deployed a variety of tactics and arguments to try to kill or weaken the consumer agency. Seila must be understood in this context. It did not simply arise, as the Court suggested, from novel legislative design. It was the culmination of a relentless antiregulatory oppositional campaign that began when Congress and the President took up Warren’s proposal — and that eventually turned into a constitutional battle.
The second story places Seila within the context of the rise of the unitary executive theory. Part II shows how the unitary theory went from virtually nonexistent in the 1970s to a major part of legal and scholarly debate by the 1990s and 2000s. Its rise was not so much a function of popular constitutionalism in the form of a social movement or public opinion as it was elite efforts. The unitary executive theory gained steam through the initiative of conservative presidential administrations (Ronald Reagan and George W. Bush) and a systematic effort to articulate and defend the theory in legal scholarship. Chief Justice Roberts’s straightforward, briefly reasoned opinion in Seila reflects the success of the conservative legal movement in making the theory plausible. Justice Kagan’s piercing dissent lays bare how contested this reasoning is. Taken together, the conservative push for a unitary executive and the battle between Chief Justice Roberts and Justice Kagan should leave readers with the sense that the case is “political” in a different sense.
The third story is one of values and consequences rather than historical context. Given that the first-order consequences of Seila and of a presidential removal power are symmetrical for presidents of both political parties, are there “political” reasons why conservatives are so interested in the presidential removal power? And conversely, are there “political” reasons why liberals and progressives have been so opposed to it? The opinion in Seila leaves traces of possible normative views of how the separation of powers should be enforced, which in turn point to some potentially larger ideological stakes. In addition, scholars often reference the rise of the removal power as a danger to the administrative state, but it is unclear precisely through what mechanism this operates, given the first-order symmetry of the rule itself. Part III canvasses these normative views and the mechanisms that might produce asymmetric consequences. It is admittedly a speculative enterprise, but to the extent any of these normative views or policy consequences ring true (and they may not, or may not for everyone), they further indicate why Seila and the removal power should be considered deeply “political.”
∗ Professor of Law and Director, Program in Law and Government, Vanderbilt Law School. Thanks to Rebecca Allensworth, Kate Andrias, Jed Britton-Purdy, Jessica Clarke, Dan Epps, Joey Fishkin, Gautam Hans, Amy Kapczynski, Daryl Levinson, Adam Levitin, David Lewis, Leah Litman, Bill Marshall, Lev Menand, Gillian Metzger, Tim Meyer, David Pozen, Ed Rubin, J.B. Ruhl, Chris Serkin, Dan Sharfstein, Suzanna Sherry, Reva Siegel, Chris Slobogin, Kevin Stack, David Strauss, Mike Vandenbergh, Adam Winkler, Ingrid Wuerth, and participants in workshops at the University of North Carolina Law School and Wharton Legal Studies and Business Ethics Department for comments and suggestions. Thanks also to Cloe Anderson, Meredith Capps, and Madeleine Carpenter for helpful research assistance.