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Credit Unions, CDFIs, CRL File Amicus Brief to Defend Constitutional Structure of Consumer Financial Protection Bureau

January 22, 2020


The CFPB’s structure is constitutional and critical to ensuring that it can carry out its consumer protection mission free from undue political and industry influence.

WASHINGTON, D.C. – Today, the Center for Responsible Lending (CRL) and Cohen Milstein Sellers & Toll PLLC (Cohen Milsteinsubmitted an amicus brief to the United States Supreme Court in the case of Seila Law LLC v. Consumer Financial Protection Bureau (CFPB) on behalf of their clients, community development financial institutions (CDFIs) Self-Help Credit Union, Hope Enterprise Corporation / Hope Credit Union (HOPE), Inclusiv, and the National Association for Latino Community Asset Builders (NALCAB).

The credit unions, community development financial institutions (CDFIs), and two trade associations, are urging the Court to preserve the independent, single-director structure of the CFPB. “The CFPB’s independence allows smaller CDFIs and Community Development Unions to thrive by giving them a voice in a regulatory world that is otherwise dominated by bigger institutions,” said Geoff Graber of Cohen Milstein.

The CFPB, as established by the Dodd-Frank Wall Street Reform and the Consumer Financial Protection Act, is an independent agency led by a single Director who is appointed by the President for a term of five years and removable for cause.

“The tools of independence Congress used to protect the CFPB are not at all novel. And what is new about the CFPB’s design—its exercise of unfragmented jurisdiction and prioritization of the interests of consumers—reflects a policy correction to address the failures that led to the financial crisis [of 2007-2008],” wrote the amici in their brief. “The CFPB’s focus on consumers, consistent approach to consumer protection, and both its independence and public accountability, ensure the health of the marketplace of financial products and services. By creating a predictable and fair regulatory environment in which to do business, the CFPB also promotes the long-term health of responsible smaller financial institutions, like the Community Development Credit Union Amici.”

The case is attempting to undermine the independence of the nation’s consumer protection watchdog.  Seila Law LLC, a debt collection law firm, is arguing to give the President influence and control over how the CFPB oversees the financial services industry. Seila’s lawsuit contends that the structure of the CFPB is unconstitutional because it only allows the President to remove the CFPB Director for-cause. Congress, however, established the independent CFPB to prevent the President from removing the CFPB Director for political reasons.

Ruling to undermine the CFPB’s independence by allowing a President to fire the CFPB Director at-will puts economically distressed communities, such as communities of color, the Deep South, and other areas historically hit hardest by predatory lending practices like payday lenders and unfair mortgage lending practices.

In September 2019, CFPB Director Kathy Kraninger announced that the CFPB would no longer defend the constitutionality of its Director’s for-cause removal provision. Together with the U.S. Department of Justice, Director Kraninger asked the Court to consider an appeal that would allow the president to remove the CFPB director at-will instead of for-cause.

The case will be heard before the Supreme Court in March. A decision on Seila Law LLC v. CFPB is expected this spring or early summer.


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A copy of the release can be accessed here.