Connecticut Attorney General George Jepsen is leading a group of 16 other state attorneys general in filing a motion to intervene in a federal appeals case to defend the constitutionality of the federal Consumer Financial Protection Bureau.
"The CFPB is the cop on the beat, protecting Main Street from Wall Street misconduct," Jepsen said in a statement. "It was structured by Congress to be a powerful and independent agency that would protect consumers from the abuses of Wall Street, banks, and other large financial institutions. That mission is still critical to consumers today.
"However, the Trump Administration has said it intends to weaken the CFPB. That calls into question whether the new administration will adequately defend the CFPB and the American public it protects."
The case – PHH Corp., et al. vs. Consumer Financial Protection Bureau – is before the U.S. Court of Appeals for the District of Columbia Circuit. In an October ruling, a divided court found the structure of the CFPB unconstitutional. The CFPB filed a petition for rehearing of the decision, and that petition is pending before the court. To this point, the Obama administration had vigorously defended the CFPB in the appeal.
But in Monday's motion to intervene in the litigation, the attorneys general argue that they have a vital interest in defending an independent and effective CFPB, Jepsen's office said in a statement.
They are using their authority to bring civil actions in coordination with the CFPB to protect consumers against unfair, deceptive and abusive financial practices, Jepsen said. They argue that the court's ruling, if permitted to stand, would undermine the power of state attorneys general to effectively protect consumers against abuse in the consumer finance industry, and significantly lessen the ability of the CFPB to withstand political pressure and act effectively and independently of the president.
They further argue that it is urgent that attorneys general intervene because President Donald Trump has expressed strong opposition to the Dodd-Frank reforms that created the CFPB, Jepsen said. According to media accounts, the Trump administration is likely to fire the current director of the CFPB and even abandon the legal defense of the agency.
"Contrary to his populist rhetoric, the president's failure to support the CFPB would be a gift to powerful financial interests and a bitter broken promise to regular Americans he vowed to defend," Jepsen said. "State attorneys general were the first voices to warn of the financial fraud that lead to the 2008 financial crisis and remain on the front lines of preventing deceptive and abusive financial practices.
"The Dodd-Frank financial reform law established a system under which state attorneys general work in effective coordination with the CFPB to enforce financial consumer protection laws. Should the Trump Administration fail to adequately defend the CFPB in this litigation, state attorneys general – and the public – could lose the benefits of a powerful enforcement partnership."
Congress created the CFPB in 2010 to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace. During its 2016 fiscal year, the CFPB's supervisory actions resulted in financial institutions providing more than $58 million in redress to over 516,000 consumers, according to its report to Congress.
The agency receives thousands of consumer complaints every week from consumers across the country.
Joining Connecticut on Monday's motion are attorneys general from Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.