On February 19, a group of states filed an amicus brief in support of a request by the City Council and Mayor of Baltimore to preliminarily enjoin the CFPB and its Acting Director, Russell Vought, from actions that would defund the CFPB. As previously covered by InfoBytes, the plaintiffs filed suit against the CFPB seeking injunctive and declaratory relief against actions taken by the defendants, and the CFPB’s Vought confirmed that he would pause any defunding actions for a fortnight (covered by InfoBytes here).
In their brief, the states argued they and their residents will suffer irreparable harm from the defunding of the CFPB, which they contended will essentially shutter the agency. The states argued the loss of the CFPB’s statutorily mandated consumer complaint system, its access to data the Bureau is required to collect under the Dodd-Frank Act, and distributions from the Civil Penalty Fund warrant injunctive relief. Additionally, the states also argued the CFPB’s dormancy will create a gap in the supervision of large national banks regarding consumer financial protection laws. This, the states contended, will hurt consumers and state-chartered banks seeking to compete with large banks.
Finally, the states argued they will be burdened by the loss of the CFPB’s partnership in both enforcement and supervision of the financial industry. For example, the states argued the CFPB’s concurrent jurisdiction over nonbank entities deters misconduct and protects consumers who, without the CFPB, will be left without crucial protections.
On February 20, the defendants filed their opposition to the motion, arguing, among other things, that the claims are unripe, that the plaintiffs are not challenging any agency action and thus cannot bring a claim under the APA. The court has scheduled its ruling for the pending motion for preliminary injunction on February 26.
