- What’s at Stake: A three- judge panel already ruled in August that the Trump administration can fire up to 1,500 employees of the CFPB.
- Forward Look: Allowing the Trump administration to dismantle the agency would represent “a blatant disregard for Congress’s constitutional role,” Democrats claim.
- Expert Quote: “Only Congress has the power to shutter the CFPB,” Democratic lawmakers state.
Democratic lawmakers are asking a federal appeals court to hear a case about the Trump administration’s efforts to fire most of the employees at the Consumer Financial Protection Bureau, arguing his attempt to shutter the agency is unconstitutional.
“A President, of course, may disagree with Congress’s choice,” the lawmakers said in an
The brief was signed by 36 Democratic lawmakers led by House Financial Services Committee ranking member Rep. Maxine Waters, D-Calif., Senate Minority leader Chuck Schumer, D-N.Y., and Senate Banking Committee ranking member Elizabeth Warren, D-Mass. The lawmakers asked the full D.C. Circuit to rehear the case filed by the National Treasury Employees Union’s against acting CFPB Director Russell Vought. The brief was jointly written by Leah M. Nicholls, director of the Access to Justice project, and Hannah M. Kieschnick, a senior attorney at Public Justice, a nonprofit advocacy group.
In August, a
By a 2-1 vote, the panel held that Vought’s effort to conduct RIFs did not constitute a final agency action — or even a policy — and, therefore, was not reviewable by the courts under the Administrative Procedure Act. The panel of two Trump-appointed judges sided with the Trump administration while one Obama-appointed judge dissented.
“Absent a preliminary injunction, Defendants will implement their decision to eliminate the CFPB. Allowing Defendants to do so would represent a blatant disregard for Congress’s constitutional role and threaten the consumers the CFPB was created to protect — and has protected since its creation a decade and a half ago,” the lawmakers’ brief said.
The Democratic lawmakers argue that the full D.C. Circuit needs to hear the case “en banc,” because the issues involve the separation of powers.
“If the majority’s opinion is left to stand, courts in this Circuit will thus be “powerless” to stop a President from acting with impunity and dismantling any statutorily-created agency — or ignoring any statute he so chooses,” they wrote. “That result simply “cannot be reconciled with either the constitutional separation of powers or our nation’s commitment to a government of laws. En banc review is urgently needed to avoid such an outcome.”
Congress created the CFPB in response to the 2008 financial crisis that required massive government intervention given that nearly 500 banks failed at a cost of roughly $73 billion to the Federal Deposit Insurance Corp.’s insurance fund, the brief states.
Before the Dodd-Frank Act of 2010 led to the creation of the CFPB, 18 consumer financial protection laws were scattered across several agencies. Title X of Dodd-Frank transferred the oversight authority of those laws to the CFPB and gave the agency broad rule-making authority and the ability to issue regulations identifying as unlawful “unfair, deceptive, or abusive acts or practices” related to consumer financial products or services. The CFPB also has exclusive authority to supervise large banks.
The lawmakers argued that reducing the workforce at an agency to such an extreme degree is effectively the same as eliminating the agency, which the president does not have the power to do.
“Only Congress has the power to shutter the CFPB,” the brief states, adding that when “Congress has enacted a statute, as it did with Dodd-Frank, ‘no provision in the Constitution authorizes the President to enact, to amend, or to repeal’ it.
“There is no general authorization to restructure the executive branch, including by dissolving a statutorily-created agency,” the brief continued. “Nor does Dodd-Frank delegate to the President the authority to dismantle the CFPB. Rather, the Act vests in Congress substantial oversight over the Bureau.”
The brief cites the 1952 case of Youngstown Sheet & Tube Co. v. Sawyer, a landmark Supreme Court decision that limited the power of the president and has served as a check on far-reaching claims of executive power.
“The President must participate in the political process and adhere to the Constitution’s structure, not ignore it,” the brief states. “The country’s history includes numerous examples of the branches working together to eliminate statutorily-created agencies.”
“And, even while amending the CFPB’s governing statutes, Congress has rejected efforts to eliminate the Bureau wholesale,” the brief states.
