Are Independent Agencies Constitutional?

November 22, 2016 at 11:06 am 1 comment

What Executive Orders give, they can also take away. In this video released by President Elect Donald Trump he outlines the Executive Orders that he plans to make in the first 100 days of his Administration. Most importantly for our purposes, the President Elect says he will promulgate a requirement that for every new regulation proposed by an agency it has to eliminate two existing regulations.  It appears that the Trump Administration plans a new meaning of two-for-one.

While proposals such as this are enough to make compliance people giddier than a five-year-old on Christmas Eve, their direct impact on credit unions remains to be seen. Our good friends at the CFPB are challenging a decision by the federal Court of Appeals for the District of Columbia, which found that the CFPB was only Constitutional if its Director could be hired and fired at will by the President. PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1, 31 (D.C. Cir. 2016). The  NCUA is an independent agency with a three member board appointed to staggered six year terms. Intriguingly, federal law does not explicitly provide that NCUA board members can only be removed “for cause” by the President. Swan v. Clinton, 100 F.3d 973, 988 (D.C. Cir. 1996).

This is pure speculation on my part, but if, as seems probable, the Supreme Court decides to hear an appeal of PHH Corp, the case  could be used as a vehicle by a conservative leaning nine member Supreme Court to re-examine the broader question of whether independent agencies are themselves Constitutional.

In a case called Humphrey’s Executor v. United States, 295 U.S. 602, 624, 55 S.Ct. 869, 79 L.Ed. 1611 (1935), the Supreme Court upheld the creation of independent executive branch agencies.  But even as it upheld the Bureau, the D.C. Court questioned the premise of this decision and the existence of independent agencies.

“[I]ndependent agencies are unaccountable to the President and pose a greater threat to individual liberty because they operate free of the President’s supervision and direction. Therefore, they traditionally have been headed by multiple members who check one another. An independent agency operates as ‘a body of experts appointed by law and informed by experience.’”

Thanksgiving by Executive Order

Speaking of Executive Orders you have Proclamation 106—Thanksgiving Day, 1863 issued by Abraham Lincoln for having Thursday off.  In October of that year he proclaimed that:

“It has seemed to me fit and proper that they should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow-citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next as a day of thanksgiving and praise to our beneficent Father who dwelleth in the heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans. mourners, or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty hand to heal the wounds of the nation and to restore it, as soon as may be consistent with the divine purposes, to the full enjoyment of peace, harmony, tranquility, and union.” 

CFPB Looks into Information Sharing Practices

The Bureau That Never Sleeps is in the crosshairs of the Judiciary and the incoming Administration but that is not keeping it from continuing to churn out proposals. Last week it issued a Request For Information regarding consumer access to financial records. These RFIs have been used by the Bureau to help structure more formal regulatory proposals.

It is asking a series of twenty questions starting with wanting to know what types of products and services are currently made available to consumers that rely in part on consumer permission to access consumer account data.

Your faithful blogger will be back on Monday after going over the river and thru the woods to grandma’s house on Long Island. I hope you all have a great Thanksgiving, and that no one gets too fired up when the family banter inevitably turns to politics. I have already promised my mother that I will be on my best behavior.


Entry filed under: General, Legal Watch. Tags: , .

While The Nation Tweeted Three Things That Happened While you were in a Turkey Fog….

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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