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States Challenge CFPB Structure

Eleven state attorneys general are joined a complaint challenging the structure of the Consumer Financial Protection Bureau, according to a brief filed with the United States Supreme Court obtained by Reverse Mortgage Daily. The brief argues that the  leadership structure of the CFPB is unconstitutional, stating that its structure encroaches on the states’ own abilities to enforce its own consumer protection laws.

The coalition of states includes Texas, Arkansas, Indiana, Kansas, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, Utah, and West Virginia.

“If Congress wishes to permit federal agencies to assist or preempt States in protecting consumers, it must do so in a manner consistent with Article II of the Constitution,” the brief reads in part. “The CFPB’s structure violates the Constitution whether its director was (at any given point) temporary or permanent. The CFPB thus had no authority to bring or to continue the enforcement action.”

The CFPB was similarly challenged earlier this year by a California law firm that argues the Consumer Financial Protection Bureau is unconstitutionally structured. The U.S. Supreme Court agreed to hear the appeal of the law firm, Seila Law, who alleges that the structure of the agency grants too much power to its director.

The Supreme Court is expected to hear the Seila Law LLC V. Consumer Protection Bureau suit some time in 2020, and CNBC reports that a decision in the case is likely by the end of June.

Last year, in a split decision, a Washington appeals court reversed a previous ruling, declaring the structure of the Consumer Financial Protection Bureau to be constitutional after all. The Court of Appeals for the District of Columbia Circuit ruled in January 2018 that the CFPB's structure is constitutional and that the director of the agency can only be fired by the president for “inefficiency, neglect of duty, or malfeasance in office.”

The court's ruling read, in part, "None of the theories advanced by PHH supports its claim that the CFPB is different in kind from the other independent agencies and, in particular, traditional independent financial regulators.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.

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