The People The Consumer Financial Protection Bureau Regulates Are Trying To Kill It

In the midst of impeachment mayhem, it can be easy to miss major revelations about other ways Republicans are destroying our country.

Next month, the Supreme Court will hear a case about the constitutionality of the Consumer Financial Protection Bureau (CFPB). Dismantling the CFPB is something that people it regulates have been trying to do basically since it was created in 2011. Because why protect consumers from fraud when you cold be duping them and stealing their money?

Unsurprisingly, the vast majority of friend of the court briefs supporting the destruction of the CFPB come from those who are funded in one way or another by industries the CFPB regulates.

Seila Law LLC v. CFPB

The CFPB is investigating a firm called Seila Law and requested a number of documents to help with their investigation. Rather than turn over the docs, Seila Law argued that the CFPB was unconstitutional.

The CFPB has recovered more than $12 billion for consumers in the last eight and a half years. It was created in the wake of the Great Recession as part of the Dodd-Frank Act, with a mission of protecting consumers from predatory companies in the financial industry. And ever since, the people it regulates have been trying to shut it down.

The issue here is whether the way the agency is set up is constitutional. The CFPB has only one director, appointed by the president and approved by the Senate, and the director can only be removed by the president for good cause. Seila Law argues this structure is unconstitutional.

The Ninth Circuit ruled that the CFPB was constitutional and ordered the alleged fraudsters at Seila Law to turn over the damn documents, so the fact that SCOTUS took up the case is not a good sign for the CFPB. And neither is the fact that they added a second issue for the parties to brief.

The Supreme Court granted cert in one question,

Whether the vesting of substantial executive authority in the Consumer Financial Protection Bureau, an independent agency led by a single director, violates the separation of powers;

and added a second,

Whether, if the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of powers, 12 U.S.C. §5491(c)(3) can be severed from the Dodd-Frank Act.

So not only could this case kill the CFPB; it could also kill the entire Dodd-Frank Act, which overhauled financial regulation after predatory financial practices helped lead to the Great Recession.

Trump's CFPB chief, Kathy Kraninger, has refused to defend her agency and her position, and, indeed, has argued that the CFPB "impermissibly infringes the separation of powers fundamental to our constitutional structure."

Because of this, the Supreme Court appointed George W. Bush Solicitor General Paul Clement to defend the constitutionality of the agency's structure.

The assholes trying to dismantle the CFPB

Watchdog group Allied Progress prepared a report about the groups filing amicus briefs of people wanting to abolish the CFPB, and it's pretty much what you would expect. As reported by Salon, 78% of the amicus briefs arguing the CFPB should be dismantled come from "CFPB-regulated entities, Republican lawmakers who have accepted campaign contributions from those industries, or think tanks and legal foundations funded by industry money or led by industry leaders."

As noted by Allied Progress director Derek Martin,

The vast majority of those questioning the CFPB's constitutionality have some financial motive in seeing the bureau stripped of its independence. Many apparently have an axe to grind after the bureau dared to hold them accountable in the past for ripping off consumers, including 9/11 heroes. Those seeking to undermine the CFPB should make their true motivations clear.

Let's take a look at these newfound constitutional scholars!

  • Advance Financial is a payday lending company owned by Mike Hodges. Hodges has been recorded bragging about buying influence with Trump and the RNC. Advance Financial also paid $350,000 to Al Simpson, a former Mick Mulvaney aide, to lobby the Trump regime for more lax CFPB regulations.
  • Roni Dersovitz and his companies were sued for "allegedly scamming 9/11 heroes out of money intended to cover medical costs, lost income, and other critical needs."
  • Harpeth Financial Services is another payday loan company. In 2018, it lobbied the CFPB to try to gain more access to consumers' checking accounts.
  • Daniel Lipsky's companies were fined $7.93 million after they were accused of misleading customers about the cost and savings of their program. They filed an amicus brief seeking to "terminate enforcement actions taken by the unconstitutionally structured agency and argued that "[s]etting aside past agency action also is necessary to provide meaningful relief to litigants."
  • The Pacific Legal Foundation and Landmark Legal Foundation have received millions of dollars from William Dunn, who founded a financial firm that has more than $1 billion in assets under management.
  • The Buckeye Institute has received more than $3 million from organizations linked to the Koch brothers, who have been fighting against the CFPB since its inception.
  • The Consumer Bankers Association's member banks have been ordered to pay hundreds of millions of dollars in CFPB actions.
  • Twenty-seven House Republicans filed a brief arguing the CFPB is an "unprecedented threat to the separation of powers and to the democratic legitimacy of the federal government." Those 27 Republicans have received $67.9 million in contributions from the insurance, financial, and real estate industries.
  • Republican Senators Mike Lee, James Lankford, and Mike Rounds have each received more than $1 million in contributions from CFPB-regulated agencies, for a combined total of $4.98 million.

So yeah. They're definitely all doing this for legitimate reasons founded in constitutional law.

To quote President Bartlet, what's next?

Oral argument in Seila Law LLC v. CFPB is set for March 3. It should give us some idea of how the justices are leaning.

But we can already predict with some certainty how one justice is going to rule. In 2018, Kegs Kavanaugh wrote a dissent for the DC Circuit, arguing the CFPB's "novel structure" violated the Constitution with "power that is massive in scope, concentrated in a single person, and unaccountable to the President[.]"

As for the rest of the Court, only time will tell.

Stay tuned.

[ Salon / 9th Cir. / Cert Petition ]

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Jamie Lynn Crofts
Jamie Lynn Crofts is sick of your bullshit. When she’s not wrangling cats, she’s probably writing about nerdy legal stuff, rocking out at karaoke, or tweeting about god knows what. Jamie would kindly like to remind everyone that it’s perfectly legal to tell Bob Murray to eat shit.

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