NY-Led Coalition’s Amicus Brief in CFPB Case Urges SCOTUS to Preserve State Powers

January 24, 2020 – State Attorney General Letitia James is leading a 24-state coalition that has filed an amicus brief to the U.S. Supreme Court arguing for preserving the Consumer Financial Protection Bureau’s existence and, perhaps as importantly, argues the coalition, keeping in place state powers under the Dodd-Frank Act even if the protection bureau is found to be unconstitutional.

In a 33-page amicus brief lodged with the Supreme Court and signed by James and state Solicitor General Barbara Underwood, the states coalition weighs in on a years-long legal fight that is pending at the high court: Seila Law, a California law firm facing an investigation by the protection bureau, has argued that the bureau itself is unconstitutional, as created and structured under the Dodd-Frank Act, because the for-cause-only termination of its director violates the Constitution’s separation of powers clause while also impinging on the U.S. president’s executive power, according to James’ news release about the amicus filing and court documents.
In their brief, New York state and the others joining it say they support the arguments of court-appointed amici for the constitutionality of the for-cause agency director removal provision. But the states coalition also emphasizes and spends much of its brief strongly arguing for preserving the powers given to the states under Title X of the Dodd-Frank Act, even if the court were to find that the for-cause removal clause is constitutionally invalid.

James and the other state attorneys general who signed onto the brief frame as a question presented whether the statute creating the protection bureau can be severed from the rest of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and they argue that such severance should occur.

“Severability is supported not only by the the Dodd-Frank Act’s express severability clause, but also by Congress’ strongly expressed intent to create a more robust consumer-protection regime to avert another financial crisis,” the coalition’s brief states. It adds, “There is no indication that Congress would have abandoned this important policy objective if it had understood that the CFPB’s Director would be removable at will.”

In a news release issued by James’ office Thursday, shortly after the coalition’s amicus brief was filed, James said, “Following the Great Recession, the Consumer Financial Protection Bureau was created as an independent enforcer of consumer protection laws to ensure that consumers could never again be so egregiously defrauded, deceived, or misled by private companies. Opponents are now asking the Supreme Court to undo years of financial and consumer protections that have saved Americans hundreds of millions of dollars and remedied countless abusive and fraudulent practices.”

Then the New York attorney general added, “Our coalition will continue fighting to ensure the existence of the CFPB and, more importantly, the continuation of the protections that help the states ensure the financial protection of the American people.”
The news release also explains that the amicus brief, among other things, “highlights the various provisions of Title X that are unrelated to the CFPB, but nonetheless give the states powerful tools to combat fraud and abusive practices.”

“These provisions provide important support to the states’ efforts to protect consumers and are independent of the CFPB,” the release also says, adding, “The brief concludes by arguing that these new state powers should survive even if the for-cause removal provision or the CFPB itself is unconstitutional.”

An email to Seila Law, the California law firm plaintiff in Seila Law v. CFPB, seeking comment on the states coalition’s brief was not returned.

The Supreme Court is set to hear argument in the case in March.

By Jason Grant, New York Law Journal
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