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The Consumer Financial Protection Bureau, established in 2010 to protect Americans from the type of predatory financial practices that caused the financial crisis two years before, is likely to face one of its toughest critics at the Supreme Court if President Donald Trump's pick, Brett Kavanaugh, is confirmed by the Senate.
Kavanaugh, a judge on the Court of Appeals for the District of Columbia Circuit, has repeatedly ruled that the structure of the consumer watchdog is unconstitutional.
In October 2016, Kavanaugh claimed that the head of the agency, which was founded in the aftermath of the 2008 global financial crisis, had more power than any government official besides the president, and struck down its structure on constitutional grounds even as a dissenting judge said the same result could have been reached more narrowly.
"The concentration of massive, unchecked power in a single Director marks a dramatic departure from settled historical practice and makes the CFPB unique among independent agencies," Kavanaugh wrote in an October 2016 ruling in PHH v. CFPB. He declared that the director of the CFPB was not just a director, but was the "President of Consumer Finance."
"Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power," Kavanaugh wrote. "That is not an overstatement."
Kavanaugh wrote that the head of the agency was more powerful than the speaker of the House, the chief justice of the Supreme Court, the chairman of the Federal Reserve, the secretary of Defense, and — within the CFPB director's wide-ranging jurisdiction — the president himself.
Two years later, the full court overturned Kavanaugh's ruling on the constitutional matter, likening the case against the CFPB to a "wholesale attack on independent agencies — whether collectively or individually led — that, if accepted, would broadly transform modern government."
Court watchers have their eyes on the 5th U.S. Circuit Court of Appeals, which agreed in April to hear a constitutional challenge to the bureau. A finding against the CFPB would cause a circuit split — upping the chances of a review from the Supreme Court. The U.S. District Court for the Southern District of New York ruled last month that the CFPB was unconstitutional and adopted parts of Kavanaugh's dissent in its ruling.
Kavanaugh's views on the CFPB square with his longstanding approach to business cases. Kavanaugh has sided with big business and employers "almost entirely," according to an analysis conducted by Empirical Scotus, a blog that examines the top court. If he is confirmed, Kavanaugh is expected to side with the court's four Republican appointees, who along with Justice Anthony Kennedy, penned a number of landmark labor rulings last year that are expected to hamstring labor groups.
Trump has said that eliminating government regulation is central to his legacy. "We have eliminated more regulations in our first year than any administration in history," he said during his first State of the Union. The appointment of Justice Neil Gorsuch and Kavanaugh, two young, business-friendly justices, could serve to protect that legacy against legal challenges.
The Consumer Financial Protection Bureau did not respond to a request for comment. A lawyer who represented the bureau against PHH, Lawrence DeMille-Wagman, declined to comment.
Lawmakers and some consumer advocates have come out swinging against Kavanaugh's criticism of the agency, a fight which gained renewed urgency after Kavanaugh was selected to be Trump's Supreme Court nominee Monday night.
Sen. Elizabeth Warren, D-Mass., appeared on MSNBC on Monday after the announcement to defend the agency. Warren called Kavanaugh, who worked in the George W. Bush administration for five years, a "political animal." The senator noted that other agencies, like the Comptroller of the Currency, have similar leadership structures.
Warren's ties to the CFPB go back more than a decade. She first envisioned the independent agency in a 2007 paper that she wrote while a professor at Harvard Law School. She wrote that the model for the CFPB would be the U.S. Consumer Product Safety Commission, established by Richard Nixon.
Warren's communications director Kristen Orthman referred CNBC to Warren's comments on MSNBC and did not respond to further requests for comment.
The Federal Reserve, the Federal Trade Commission, the Commodity Futures Trading Commission, and the Federal Deposit Insurance Corporation are also considered independent financial regulators, and were cited by the D.C. appeals court in its defense of the CFPB.
"It’s an important agency, and it certainly has the most focus on protecting consumers, but most people have never heard of it, and to claim that it’s the most powerful after the president is ridiculous," said Lauren Saunders, the associate director of the National Consumer Law Center.
Saunders, whose organization does not take a stance on Supreme Court nominees, said that restructuring the CFPB could have an outsize impact on consumers.
"If the director always has to look over his or her shoulder to see whether they are appeasing powerful financial interests and politicians, then the director will not be able to be independent and focus on the question of what’s best for consumers and fair markets," she said.
Critics of the agency's acting director, Mick Mulvaney, have said the bureau has already become subject primarily to political whims. The agency has essentially ground to a halt since Mulvaney took the helm last November, experts have said, issuing only two enforcement actions under his leadership.
"Ironically, Mick Mulvaney has given some credibility to the theory that a single director can abuse his power," said Judith Fox, a former member of the CFPB's Consumer Advisory Board who was fired alongside the 24 other members of the advisory group during a conference call last month.
Fox, a law professor at Notre Dame who specializes in consumer law, said the short-term impact of the CFPB's effective halt to enforcement actions has been "to embolden the bad actors again."
"There is mounting anecdotal evidence that bad behavior is on the upswing as the 'word on the street' is that enforcement is over," she said.
Mulvaney's decision to fire all the members of the CFPB's advisory board was described as a cost-saving measure. Mulvaney, who also acts as Trump's budget chief in the White House, has said he wants to slash the agency's budget by 20 percent.