Corporate Accountability

There is a fierce tug of war over the future of this federal consumer watchdog

By Jonnelle Marte

Democrats and consumer groups are stepping up their efforts to defend a federal consumer watchdog that has come under increased attack since the election.

Several Republicans have intensified their efforts to weaken the Consumer Financial Protection Bureau over the last couple of weeks by calling on Trump to fire its director, Richard Cordray, who they claim has too much power over businesses as the head of the independent agency. In response, Democrats and consumer groups have touted the director’s track record of cracking down on big banks and corporations accused of misleading consumers. And now, they are taking steps to help defend the agency — and its director — in court.

Some top Democrats, along with consumer advocates and 17 state attorneys general, filed several motions this week asking for the chance to help challenge a federal appeals court decision from late last year that found the structure of the agency is unconstitutional. If left to stand, the ruling would make it possible for the president to fire the director at will, creating the possibility that the director could be swapped out with each new administration. But when the agency was created under the Dodd-Frank Act, the agency’s director could only be removed by the president for cause.

“Any attempt to weaken the CFPB by disrupting its leadership or structure presents a real threat to consumers across the country,” said Mike Calhoun, president of the Center for Responsible Lending, which filed a motion to intervene in the case, along with other groups including Americans for Financial Reform, the Leadership Conference on Civil and Human Rights and the U.S. Public Interest Research Group. “It will revert us back to lax financial regulations and cause another painful economic crisis that we simply cannot afford.”

The CFPB appealed the ruling in November and is still waiting to learn whether the case will be reheard by the full D.C. Circuit panel — a decision that could potentially come over the next several weeks. But supporters of the agency are moving to intervene in the case now after several Republicans have seemingly tried to get ahead of the court decision by asking Trump to fire Cordray, whose term ends in July 2018, with cause or by calling on the director to quit.

Staunch CFPB critic Rep. Jeb Hensarling (R-Tex.), the chairman of the House Financial Services Committee, recently released a report alleging that Cordray may have violated federal law when he decided not to reopen the comment period for proposed auto lending rules, despite the advice of his attorneys. Meanwhile, Sens. Ben Sasse (R-Neb.) and Mike Lee (R-Utah) urged Trump to dismiss Cordray “promptly” after his inauguration, criticizing the regulations proposed by the CFPB and calling the independence of the agency “unconstitutional.”

On Thursday, a lawyer for the Constitutional Accountability Center — which filed a motion on behalf of Sen. Sherrod Brown (Ohio) and Rep. Maxine Waters (Calif.), the ranking Democrats on the Senate Banking and House Financial Services committees — said the lawmakers are trying to get involved in the case for a chance to help defend the agency’s independent structure, especially if the court rejects the CFPB’s request to rehear the case. If that happens, the agency could potentially take its appeal to the Supreme Court. But lawmakers and consumer groups want a stake in the case so that they could continue defending the agency, even if the Trump administration attempts to drop the case.

“By intervening, these members of Congress want to ensure that these questions are addressed in court,” said Brianne Gorod, chief counsel for the center.

A group of Democrats in the Senate Banking Committee, including Sen. Elizabeth Warren (D-Mass.), who helped to create the agency, wrote a letter supporting Cordray and touting his accomplishments. The lawmakers applauded the CFPB’s enforcement actions, such as last year’s $100 million fine against Wells Fargo for opening accounts without customers’ permission. Democrats pointed out that the agency has returned about $12 billion in relief to consumers.

More from Corporate Accountability

Corporate Accountability
U.S. Court of Appeals for the Fifth Circuit

Ortega v. Office of the Comptroller of the Currency

In Ortega v. Office of the Comptroller of the Currency, the United States Court of Appeals for the Fifth Circuit is considering a challenge to the Office of the Comptroller of the Currency’s authority to...
Corporate Accountability
U.S. Court of Appeals for the Fifth Circuit

Burgess v. Whang

In Burgess v. Whang, the Fifth Circuit is considering a challenge to the Federal Deposit Insurance Corporation’s authority to issue penalties and other supervisory orders. 
Corporate Accountability
October 23, 2024

The Constitution Doesn’t Entitle Drug Manufacturers to a Sweetheart Deal

Washington
Big Pharma is in federal appeals court making the absurd argument that Medicare shouldn’t be...
By: Nina Henry
Corporate Accountability
October 4, 2024

An Oil Giant Railroads Its SCOTUS Connection To Gut Environmental Law

The Lever
A fossil fuel giant with deep ties to Supreme Court Justice Neil Gorsuch, along with...
Corporate Accountability
July 2, 2024

QUICK TAKE: Corporate Interests at the Supreme Court, 2023-2024 Term

Conservative supermajority discards precedent, shifts power to judges, and hobbles agency efforts to enforce the...
By: Brian R. Frazelle
Corporate Accountability
June 24, 2024

The Supreme Court’s War on Working People Just Got a Little Worse

Balls and Strikes
The decision in Starbucks Corporation v. McKinney is part of a long tradition of the Supreme Court...