Attorney General Bonta Files Multistate Amicus Brief in Defense of CFPB

OAKLAND — California Attorney General Rob Bonta, as part of a coalition of 24 attorneys general, filed an amicus brief in the U.S. Supreme Court in support of the Consumer Financial Protection Bureau (CFPB). In their amicus brief, the attorneys general support the CFPB’s contention that the agency’s funding structure is constitutional and argue that the court should not invalidate the CFPB’s past and ongoing regulatory and enforcement actions even if it determines that the agency’s current funding structure is not constitutional. Those regulatory and enforcement actions cover all aspects of consumer financial markets. The case at issue is Consumer Financial Protection Bureau v. Community Financial Services Association of America.

“The CFPB is the cornerstone of federal consumer financial protections and an important partner to state attorneys general,” said Attorney General Bonta. “The stakes for consumers, for the states, and for regulation of financial markets are enormous: if allowed to stand, the Fifth Circuit’s decision threatens to upend over a decade of enforcement and regulatory work by the CFPB. That would wreak havoc for consumers across the country.”

In 2018, payday-lending industry groups challenged a regulation by the CFPB that prohibits “an unfair and abusive act or practice” relating to the collection of payday and other loans. The regulation required lenders to disclose certain information to consumers before attempting to withdraw payments directly from a consumer’s bank account. The case made its way to the U.S. Court of Appeals for the Fifth Circuit, which held, in part, that the rule had to be vacated – or annulled – because the CFPB’s independent funding structure violated the Appropriations Clause.

In their amicus brief, the attorneys general emphasize that:

• The CFPB’s independent funding structure, by which it receives its funding from the Federal Reserve, does not violate the Appropriations Clause. Notably, the U.S. Court of Appeals for the Second Circuit recently agreed. Moreover, entities like the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union have an independent funding structure, too.
• Invalidating the CFPB’s past and ongoing enforcement actions as a consequence for a violation of the Appropriations Clause would be in direct conflict with the court’s precedent. Even when there has been a purported lack of valid congressional appropriations, the court has not questioned the validity of the underlying action itself.

Attorney General Bonta has been a strong ally of the CFPB at every step in the legal process. In December 2022, Attorney General Bonta, as part of a coalition of 22 attorneys general, urged the U.S. Supreme Court to grant the agency’s petition for review, and in February 2023, Attorney General Bonta issued a statement in response to the U.S. Supreme Court's decision to grant the review.

Attorney General Bonta joins the attorneys general of New York, Arizona, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia in filing the brief.

A copy of the brief is available here.