The Trump Administration’s efforts to “effectively shutter the CFPB” amounts to a “total dereliction of all mandatory statutory duties,” that will harm state consumer protection efforts, Democratic state attorneys general have told a Washington, D.C. federal judge.
“The CFPB has, to date, been an invaluable partner to many States in performing a variety of consumer-protection functions mandated by Congress,” the 23 state officials said, in an amicus brief in a suit filed by the National Treasury Employees Union.
The state officials also have filed a similar brief in a lawsuit filed by the mayor and city council of Baltimore. That suit levels similar allegations.
The union representing CFPB employees, several other groups and a pastor have filed suit against the bureau and Acting Director Russell Vought seeking an order that would prohibit the CFPB from doing any work to stop the agency’s operations.
In the suit, filed in the U.S. District Court for the District of Columbia, the plaintiffs ask the court to order the CFPB to resume all activities they said the bureau is required to perform under federal law, asserting a violation of the Administrative Procedure Act and a non-statutory right to seek to enjoin and have declared unlawful agency action that is ultra vires (beyond the agency’s legal power or authority).
Judge Amy Berman Jackson ruled on March 3 that her order that changes at the agency be delayed until at least March 10, when she will hold an evidentiary hearing.
Democratic attorneys general are contending that a shutdown of the CFPB’s operations would seriously harm their own efforts.
“Although some States have similar mechanisms in place, those mechanisms by themselves cannot replace overnight the CFPB’s vast nationwide complaint intake system” the Democratic attorneys general wrote. “In the CFPB’s absence, consumers will be left without critical resources.”
Inaction by the CFPB places a huge burden on states that have allocated their budget based on assistance by the bureau, according to the AGs.
The administration has sent conflicting messages about the future of the bureau. Jonathan McKernan, the Trump Administration’s nominee for CFPB director, told a Senate committee on Thursday that the bureau will continue to function. However, bureau employees have been sent home and CFPB headquarters has been closed. The agency has had the name of the bureau taken off windows at the bureau.
That causes a serious problem, the attorneys general said, adding that states and the CFPB have worked together on issues and problems that are statutorily mandated.
“The sudden withdrawal of these CFPB services, supervision and collaborative assistance will thus inflict immediate harm on States and their residents,” according to the AGs. Indeed, these problems have already begun, they added.
The AGs contend that those harms include the inability to:
- Refer complaints to the CFPB. States have suddenly lost the CFPB’s significant expertise and resources that can be invaluable in ongoing matters that protect their residents,” the AGs said.
- Communicate directly with the CFPB on collaborative investigations, active litigation or joint supervisory examinations.
- Use data that the CFPB is required to collect under the Home Mortgage Disclosure Act.
- Provide state residents with funds already awarded—but not distributed—under the Civil Penalty Fund.
State attorneys generals filing the amicus brief represent New York, New Jersey, the District of Columbia, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.
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