24 state attorneys general step up to defend CFPB

by Candyd Mendoza27 Jan 2020

A coalition of two dozen state attorneys general has filed a brief with the Supreme Court arguing that the Consumer Financial Protection Bureau’s regulatory powers should be protected.

The coalition, led by New York Attorney General Letitia James, filed an amicus brief in Seila Law, LLC v. Consumer Financial Protection Bureau. The case stems from a 2017 investigation by the CFPB into Seila Law, a California law firm, for its debt-relief practices. Seila Law sued to block the investigation entirely, arguing that the CFPB’s structure was unconstitutional because its director could only be removed for cause. Seila Law maintained that this for-cause provision violated the Constitution’s separation of powers clause.

Both the US District Court for the Central District of California and the Court of Appeals for the Ninth Circuit rejected Seila Law’s argument, and the firm has now appealed the case to the Supreme Court. The law firm is arguing that Title X of the Dodd-Frank Act – which includes the provisions that created the CFPB – must be struck down as unconstitutional.

The coalition of attorneys general vehemently dispute that claim.

“Following the great recession, the Consumer Financial Protection Bureau was created as an independent enforcer of consumer protection laws to ensure that consumers could never again be so egregiously defrauded, deceived, or misled by private companies,” James said. “Opponents are now asking the Supreme Court to undo years of financial and consumer protections that have saved Americans hundreds of millions of dollars and remedied countless abusive and fraudulent practices. Our coalition will continue fighting to ensure the existence of the CFPB, and, more importantly, the continuation of protections that help the states ensure the financial protection of the American people.”

The coalition’s brief argues that the CFPB’s structure is constitutional, and that even if the for-cause provision is invalid, the CFPB itself should survive. The brief also highlights other provisions of Title X that give states tools to fight consumer fraud.