A coalition of 24 State Attorneys General (AGs) filed an amicus brief in support of the Consumer Financial Protection Bureau (CFPB) in its case against a law firm challenging its structure.
Seila Law, a California-based law firm providing debt-relief service, refused to comply with the CFPB’s civil investigative demand. The bureau is seeking documents from the law firm to determine whether it violated consumer financial laws. Its refusal to comply prompted the bureau to file a petition asking the court to order the law firm to comply.
Seila Law is arguing that the structure of CFPB is unconstitutional
The law firm challenged the petition with an argument that the CFPB’s structure is unconstitutional citing the reason that the U.S. President may only remove the bureau’s director for inefficiency, neglect of duty or malfeasance in office.”
Seila Law argued that the for-cause removal restriction provision impedes the Executive Branch and violates the separation of power clause of the U.S. Constitution.
Both the U.S. District Court for the Central District of California and the U.S. Court of Appeals for the Ninth Circuit rejected Seila Law’s argument and ruled that the CFPB does not violate the Constitution. The law firm appealed the ruling to the U.S. Supreme Court, arguing that the CFPB and Title X of the Dodd Frank Act, which includes provisions that created the bureau and significant consumer protections, are unconstitutional.
In the amicus brief filed with the Supreme Court, the coalition of AGs defended the constitutionality of the CFPB. The coalition argued that CFPB’s structure does not violate the constitution and Congress has the authority to impose for-cause limits on the power of the President to terminate certain officials.
CFPB plays a vital role in protecting consumers
Additionally, the coalition argued that the Dodd Frank Act’s severability clause is clear that Congress intended the CFPB to survive even of certain provisions were found to be invalid. It means, even if the for-cause removal restrictions provision is invalid, the rest of the Title X should remain effective.
Furthermore, the coalition highlighted the fact that certain provisions of Title X provide powerful tools to states to fight abusive, deceptive and unfair business practices.
In a statement, California Attorney General Xavier Becerra, said, “Seila Law is trying to burn the entire house to the ground The CFPB – and the Dodd-Frank Act as a whole – play a crucial role in protecting consumers and regulating the financial services industry.”
“Courts have already rejected Seila Law’s arguments twice. We believe the Supreme Court will and should affirm that this lynchpin of federal financial regulation is constitutional.” in its efforts to avoid complying with a CFPB investigation into its activities,” he added.
Becerra together with the AGs of New York, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia are part of the coalition defending CFPB’s constitutionality.