Consumer Affairs reports that consumer advocacy groups are the latest to file motions supporting the Consumer Financial Protection Bureau in its legal battle that’s now before a federal appeals court in Washington.
They join 17 state attorneys general who earlier filed similar motions in the case of PHH Corportion vs. CFPB, asking the appeals court to rehear a 2-1 ruling that the CFPB is unconstitutionally structured. The court has stayed implementation of the decision until it decides whether it will reheat the case.
“Any attempt to weaken the CFPB by disrupting its leadership or structure presents a real threat to consumers across the country. It will revert us back to lax financial regulations and cause another painful economic crisis that we simply cannot afford,” said Center for Responsible Lending President Mike Calhoun.
Calhoun said the CFPB is doing the work Congress intended when it was formed.
“We’ve already seen the agency hard at work against abusive practices by ITT Tech, Wells Fargo, car-title and payday lenders, big banks, and other that deceive their customers,” Calhoun said. “Any efforts to halt CFPB’s progress would reduce its effectiveness and harm hardworking people.”
In their motion, the 17 attorneys general said the CFPB is part of a “powerful enforcement partnership” with the states.
“The CFPB is the cop on the beat, protecting Main Street from Wall Street misconduct,” said Connecticut Attorney General George Jepsen. “It was structured by Congress to be a powerful and independent agency that would protect consumers from the abuses of Wall Street, banks, and other large financial institutions.”
At issue is the structure of the bureau. Most independent agencies, like the Federal Trade Commission, are governed by a five-member commission, made up of commissioners nominated by the president and removable for cause.
When Congress established the CFPB, it gave it a single director who does not answer directly to the president. The idea was to ensure that the bureau was not influenced by the prevailing political winds.
Since its founding in 2010, the CFPB director has been Richard Cordray, formerly the attorney general of Ohio. He has generally received high marks from consumer groups, but his aggressive policies have created many enemies in the financial services sector.
Consumer advocates say Cordray has returned billions of dollars to consumers and reined in abusive banks, lenders, and debt collectors.
“Cordray has been an effective and tireless leader of the CFPB and should serve his full five-year term without the threat of removal by Trump at the behest of industry lobbyists,” said Lisa Donner, Executive Director of Americans for Financial Reform.
“Undermining the CFPB will leave our borrowers, and the families they support, vulnerable to financial abuse by bad actors in the financial industry. The agency has fought hard against payday and car-title lenders and returned nearly $12 billion to 29 million consumers who were deceived or harmed by the big banks,” said Maeve Elise Brown, Executive Director of Housing and Economic Rights Advocates and Chair of the CFPB’s Consumer Advisory Board.
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