Attorney General Matt Denn joined 16 other attorneys general in filing a motion Monday to intervene in a federal appeals case, with the goal of ensuring that the federal Consumer Financial Protection Bureau (CFPB).
The case – PHH Corporation, et al. v. Consumer Financial Protection Bureau – is currently before the United States Court of Appeals for the District of Columbia Circuit. In an October 2016 ruling, a divided court found the structure of the CFPB unconstitutional and ordered that the law is interpreted so that the director of the CFPB could be terminated by the President at will, rather than only for cause.
The department has long been targeted by Republicans and financial service companies for allegedly overreaching its authority. Elizabeth Warren, now a U.S. senator, had long pushed for the agency, earning the ire of the GOP.
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The CFPB filed a petition for rehearing of the decision, and that petition is currently pending before the court. To this point, the federal government had defended the CFPB in the appeal.
That is expected to change under the Trump administration, which is expected to loosen regulations on financial services companies.
Backing the agency also goes counter to the stance of Wilmington-based student loan servicer Navient, which has taken CFPB for suing the company over student loan collection practices. The CFPB’s current powers and perhaps its existence, has been questioned by the financial services industry, a key employer in Delaware.
In the motion to intervene, the attorneys general argue that they have a vital interest in defending an independent and effective CFPB. They have used their authority to bring civil actions in coordination with the CFPB to protect consumers against unfair, deceptive and abusive financial practices.
They argue that the court’s ruling, if permitted to stand, would undermine the power of state attorneys general to effectively protect consumers against abuses in the consumer finance industry, and significantly lessen the ability of the CFPB to withstand political pressure and act effectively and independently of the president.
“The CFPB must maintain its independence to fulfill its role as a watchdog over the financial industry,” Denn stated in a release. “To make the head of the CFPB subject to removal by the president at will would be to effectively undo the protections put in place for consumers after the market crash that led to the Great Recession. The federal government should continue to defend the CFPB’s structure in court, and the court should maintain the CFPB’s ability to pursue bad actors on Wall Street without political pressure.”
Congress created the CFPB in 2010. The CFPB’s purpose it to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace, a release from Denn’s office stated.
During its 2016 fiscal year, the CFPB’s supervisory actions resulted in financial institutions providing more than $58 million in redress to over 516,000 consumers, according to its report to Congress. The CFPB receives thousands of consumer complaints every week from consumers across the country, the release from Denn’s office stated.
During its 2016 fiscal year, the CFPB’s supervisory actions resulted in financial institutions providing more than $58 million in redress to over 516,000 consumers, according to its report to Congress. The CFPB receives thousands of consumer complaints every week from consumers across the country, the release stated.
In addition to Delaware, the motion includes Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.
