DOJ urges Supreme Court to preserve CFPB

by Ryan Smith21 Feb 2020

The Consumer Financial Protection Bureau is facing a challenge to its constitutionality in the Supreme Court, which will hear oral arguments in the case next month. Now the agency has found an unlikely ally – the Department of Justice.

While the Trump administration has been sharply critical of the CFPB’s regulatory actions in the past, the DOJ has urged the Supreme Court not to issue a ruling that would dismantle the agency, according to a Reuters report.

“The bureau is the federal government’s only agency dedicated solely to consumer financial protection,” the Justice Department said in a brief filed with the court. The brief argued that if the Supreme Court invalidates the statute that created the CFPB, it will harm consumers, banks, mortgage lenders and other financial institutions.

The case against the CFPB stems from a 2017 investigation by the agency 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. The law firm maintained that this provision violated the Constitution’s separation of powers clause. It is arguing that Title X of the Dodd-Frank Act – which includes the provisions that created the CFPB – must be struck down.

While the Trump administration has started that it believes the CFPB director is unconstitutionally protected from firing by the president, the DOJ said that the agency does “critical work.”

The DOJ said in its brief that the bureau “has issued numerous significant rules, obtained billions of dollars in relief through enforcement and reached millions of consumers through its education functions.”