Blue States Are Trying To Protect The CFPB From Trump

While it seems the House Financial Services Committee is getting ready to move full steam ahead on removing CFPB Executive Director Richard Cordray from his role as head of the consumer watchdog group, Democratic state officials are working on the other end to try to protect the CFPB in a court battle that would strongly limit its power going forward.

The blue state AG’s are reportedly making the move explicitly in at attempt to protect the Bureau from the Trump administration, which many fear will look to defang the agency entirely.

Attorneys general from 16 states plus the District of Columbia filed papers with a federal appeals court seeking to intervene in the case. The case stems from an October 2016 ruling that the CFPB has an essentially unconstitutional structure due to the overpowered role of its director.

The agency immediately asked the court to reconsider its decision, but the Trump administration could decide at will to drop the appeal.

Connecticut Attorney General George Jepsen is the leader of the charge — and noted in  court filings that the collective AG’s are concerned the Trump administration will fire the agency’s independent director, Richard Cordray, who was appointed by Democratic former President Barack Obama.

“It’s very much in our wheelhouse to be protecting consumers. The whole thrust of the creation of the CFPB is to protect consumers,” Jepsen said in an interview.

“We are concerned that this law is going to be gutted,” Jepsen added.

The filing, according to news reports, looks a bit like it will be the first round of what will turn into a long and brutal legal battle between the Trump administration and state officials over what is to become of the CFPB.

State officials are asking to be allowed to officially defend the agency in the lawsuit brought by mortgage lender PHH Corp even in the event that Trump’s administration drops the appeal of the ruling.

This marks yet another lawsuit filed against the Trump administration less than a week into Trump’s first term. The American Civil Liberties Union and Citizens for Responsibility and Ethics in Washington already have filed legal actions.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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