Attorney General Becerra Files Brief Defending the Constitutionality of the Consumer Financial Protection Bureau

SACRAMENTO – California Attorney General Xavier Becerra today, as part of a coalition of 24 attorneys general, filed an amicus brief in the U.S. Supreme Court in Seila Law LLC v. Consumer Financial Protection Bureau to protect the agency’s independence. Seila Law, a debt service firm being investigated by the Consumer Financial Protection Bureau (CFPB) for unfair business practices, refused to cooperate with the investigation and instead challenged the constitutionality of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). At issue in the case is a provision that limits the President’s ability to remove the director of the CFPB. Seila Law, by challenging the constitutionality of the for-cause removal restrictions, seeks to invalidate the CFPB and the Dodd-Frank Act in its entirety. The coalition argues both for the constitutionality of the for-cause removal restrictions and for the validity of the remainder of the Dodd-Frank Act, if the for-cause provision is struck.
 
“Seila Law is trying to burn the entire house to the ground in its efforts to avoid complying with a CFPB investigation into its activities,” said Attorney General Becerra. “The CFPB – and the Dodd-Frank Act as a whole – play a crucial role in protecting consumers and regulating the financial services industry. Courts have already rejected Seila Law’s arguments twice. We believe the Supreme Court will and should affirm that this lynchpin of federal financial regulation is constitutional.”
 
Congress enacted the Dodd-Frank Act in 2010 to strengthen consumer financial protections against unfair, deceptive, and abusive practices in the wake of the 2008 financial crisis. Among other things, Title X of the Dodd-Frank Act established the CFPB as the nation’s consumer watchdog and, critically, as an independent agency with the authority to issue rules and enforce federal consumer protection laws. The President, with the advice and consent of the Senate, appoints a director to head the agency for a five-year term. The director cannot be removed early, except in cases of inefficiency, neglect, or malfeasance. Seila Law argues that the provision preventing at-will removal of the director unconstitutionally impairs the President’s ability to perform his duties as head of the executive branch. Based on that objection, Seila Law has resisted turning over documents in a CFPB investigation into whether the firm violated consumer financial laws.
 
The coalition’s brief supports the CFPB’s position that Congress has the ability to impose for-cause limits on the President’s power to remove certain officers, as it did when it established the CFPB. It further asserts that the Dodd-Frank Act’s express severability clause makes clear that Congress intended the CFPB to survive even if certain provisions were determined to be invalid, meaning that a ruling on the for-cause removal restrictions in the current case should not affect the remainder of Title X or the law as a whole.
 
On August 25, 2017, the District Court for the Central District of California ruled that CFPB’s for-cause removal restriction is constitutionally permissible and does not impede the President’s ability to execute his constitutional duties. Seila Law appealed the case, and on May 6, 2019, a unanimous panel of the Ninth Circuit Court of Appeals affirmed the district court’s decision. Seila Law petitioned the U.S. Supreme Court for a writ of certiorari, which was granted in October. The case is scheduled to be argued on March 3.
 
In defending the CFPB, Attorney General Becerra joins the attorneys general of New York, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.
 
A copy of the amicus brief can be found here.