Politics & Policy

The Constitutional Law of ‘You’re Fired’

CFPB Director Richard Cordray (Reuters photo: Jonathan Ernst)
It is well within President Trump’s authority to dismiss the head of the Consumer Financial Protection Bureau.

Now that Donald Trump has been sworn in as president, one vital question is whether he will fire the director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray. As director, Cordray wields vast authority over the economy via regulation of mortgages, credit cards, and student loans. In an effort to limit the sway of future legislators, Congress insulated the CFPB from the annual appropriations process by, in effect, providing it a permanent appropriation. Even worse, Congress also curbed presidential oversight by ensuring that the president may fire the director for “inefficiency, neglect of duty, or malfeasance in office.”

Shortly before the election, a panel of the U.S. Court of Appeals for the D.C. Circuit concluded that the law limiting the president’s power to fire the director was unconstitutional. The court reasoned that, by creating an agency with vast powers and shielding it from oversight, Congress violated the Constitution’s provisions designed to defend against arbitrary decisions and the abuse of power. Since the election, the CFPB has sought a review of this decision by the entire court of appeals, contending that it “sets up what may be the most important separation-of-powers case in a generation.”

The new president may wonder whether he can fire Mr. Cordray before the courts issue a final judgment. The answer is yes, Trump could fire Mr. Cordray and order him to vacate his office. At that point, Mr. Cordray could file suit seeking back pay or a court order requiring Trump to allow him to retain his office.

Why may the president remove Mr. Cordray without waiting for the courts? To begin with, presidents may independently assess the constitutionality of statutes and act upon their assessments. In the course of refusing to enforce the Sedition Act, Thomas Jefferson observed that “the executive, believing the law to be unconstitutional, was bound to remit the execution of it.” Jefferson said this in the face of courts that had previously upheld the Sedition Act’s constitutionality.

Moreover, the president may rightly determine that the limitation on his authority to remove the director is unconstitutional. The Constitution vests the “executive Power” in a single president, and requires that he “take Care that the Laws be faithfully executed.” These provisions have long been understood to grant the president the power to fire executive officers. During the First Congress, James Madison was one of many who argued that “if any power whatsoever is in its nature Executive it is the power of appointing, overseeing, and controlling those who execute the laws.”

Madison’s argument rested on an intuitive and appealing theory: To protect the people’s liberty, the Constitution ensures that executive officers are subject to presidential supervision when they investigate and prosecute private citizens. In turn, the president is accountable to the nation. As Madison put it, “The lowest officers, the middle grade, and the highest, will depend, as they ought, on the president, and the president on the community.” Were the law otherwise, an incoming president could be forced to work through officers who opposed his policies and who hamstrung the implementation of the platform for which the electorate just voted.

A law that shields an officer as formidable as the CFPB director can have no place in our constitutional scheme.

Although this has been the dominant interpretation of “executive power” tracing back to the founding, there would be no constitutional debate if there were not historical counterarguments to be made. From time to time, Congress has tried to force the president to work with officers opposed to his agenda. The most infamous instance arose after the Civil War, when the Radical Republicans in Congress declared that President Andrew Johnson could remove cabinet officials only with the Senate’s consent. After the president ignored the statute and fired War Secretary Edwin Stanton, the House impeached Johnson and the Senate came within one vote of a conviction.

What followed was a series of cases that zigged and then zagged. In 1926, Chief Justice William Howard Taft, writing for the Court, correctly held that a Senate check on firings was unconstitutional and that the president could remove executive officers. But in a surprising volte-face, the Court later sanctioned congressional limits on the president’s authority to remove “quasi-judicial” officers. The legal confusion that this decision caused gave rise to the so-called “independent agencies” — independent precisely because a president may not remove their leaders any time that he disagrees with their policies. The judicial muddle also gave rise to the misguided statute authorizing the independent counsel, which the Supreme Court upheld on the ground that the limits on removing a prosecutor did not “unduly trammel on executive authority.”

Madison and Taft were right. The Congress that sought to force a president to retain a hostile cabinet was wrong, as were the Congress that enacted the independent-counsel statute and the Congress that created the CFPB. To say otherwise would permit legislators to create a permanent class of unelected, autonomous bureaucrats who may thwart a president’s agenda.

A law that shields an officer as formidable as the CFPB director can have no place in our constitutional scheme. The Constitution makes the president the head of the entire executive branch, including the CFPB and its director. That is why Trump may fire Cordray at his discretion.


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