Attorney General James Helps Win Supreme Court Decision Ensuring Federal Consumer Protections Remain in Place

AG James Led Amicus Brief Arguing in Support of the Consumer
Financial Protection Bureau and Federal Consumer Protections

AG James Calls on CFPB Director to Focus on
Protecting Consumers, Not Financial Institutions

NEW YORK – New York Attorney General Letitia James today helped win a major victory in the U.S. Supreme Court that preserves the Consumer Financial Protection Bureau (CFPB) and the Dodd-Frank Act’s important federal consumer protections in the case Seila Law, LLC v. Consumer Financial Protection Bureau. Although the court held that the CFPB director can now be removed at will by the president of the United States, it agreed with the argument made in a multistate amicus brief, led by Attorney General James and joined by a coalition of 23 other attorneys general, fighting to ensure that the states can continue to benefit from powerful tools granted to both the CFPB and the states under Title X of the Dodd-Frank Act to safeguard against fraud and abusive consumer practices.

“Following the Great Recession, the Dodd-Frank Act created the CFPB and granted vigorous enforcement powers to the states to ensure that consumers could never again be egregiously defrauded, deceived, or misled by private companies, and with today’s Supreme Court decision, that important work can continue,” Attorney General James said. “Although we disagree with the Supreme Court’s ruling about the director’s independence, a separate ruling the court issued protects years of financial and consumer protections that have saved Americans hundreds of millions of dollars and remedied countless abusive and fraudulent practices. The CFPB can continue to be an independent enforcer of consumer protection and states can continue to pursue remedies under federal law to root out fraud and abusive consumer practices in the market. It’s time, however, that the current CFPB director actually focus on the financial well-being of the American people, instead of leaving them to fend for themselves.”

In 2017, the CFPB commenced an investigation into the California law firm Seila Law for its debt-relief practices. Seila Law sought to block the investigation entirely, arguing that the CFPB is unconstitutionally structured because the agency’s director may only be terminated by the president “for inefficiency, neglect of duty, or malfeasance in office.” According to Seila Law, this for-cause removal provision impinges on the Executive Power and violates the U.S. Constitution’s separation of powers clause. The U.S. District Court for the Central District of California and U.S. Court of Appeals for the Ninth Circuit both rejected Seila Law’s arguments and upheld the constitutionality of the CFPB. While the Supreme Court today reversed those decisions, holding that the Dodd-Frank Act’s for-cause removal provision is unconstitutional, it further held that the CFPB’s creation and the powers it has to protect consumers are severable from that provision — the position that the amicus brief led by Attorney General James had advocated. While the CFPB director can now be removed at the will of the president, Attorney General James today called on the current CFPB director to work to protect consumers and ensure the financial protection of the American people, instead of focusing on protecting financial institutions.

This case was handled by Assistant Solicitor General Caroline A. Olsen, Deputy Solicitor General Steven C. Wu, and Solicitor General Barbara D. Underwood — all of the Division of Appeals and Opinions.