Fourteen Republican state attorneys general have filed a brief in federal court in support of a mortgage firm challenging the constitutionality of the structure of the CFPB.
In addition, 13 trade associations representing financial services organizations, including CUNA and NAFCU, filed briefs in the case, but those groups addressed a much narrower argument rather than the constitutionality of the CFPB.
“The Consumer Financial Protection Bureau’s novel governance structure violates the separation of powers in ways that directly threaten critical federalism interests,” the attorneys general said.
In addition to the 14 GOP attorneys general, Georgia’s attorney general’s office, which is non-partisan, joined in the following.
In the suit, filed by PHH, a mortgage company, a panel of the U.S. Circuit Court of Appeals for the District of Columbia ruled that the structure of the CFPB is unconstitutional because it is governed by a single director – currently Richard Cordray – who can only be removed for cause. The panel said that the president should be able to fire the director for any reason.
However, the appeals court granted a request by the agency to have the entire appellate court consider the ruling.
“The regulation of much of the nation’s financial system has been vested in a single director accountable to no one but himself or herself,” the attorneys general argued in their brief.
In addition to Georgia, the attorneys general filing the brief are those serving in Missouri, Alabama, Arizona, Arkansas, Idaho, Indiana, Kansas, Louisiana, Nevada, Oklahoma, South Dakota, Texas, West Virginia and Wisconsin.
A group of Democratic attorneys general have filed documents indicating their intention to file a brief in the case. Those attorneys general had sought to intervene in the case, but the appellate court denied that request.
Meanwhile, the financial services trade groups filed a brief arguing that the CFPB misinterpreted the Real Estate Settlement Procedures Act in taking action against PHH.
The bureau “misread RESPA, overturned decades of settled interpretations without any notice and disrupted a large sector of the economy,” the groups contended.
The Obama Administration had sided with the CFPB in the case, but the Trump Administration has been given the opportunity to file its own brief in the case – an indication that it likely will side with PHH.
