CFPB

CFPB Constitutionality is an Ongoing Debate And Now All American Check Cashing Thinks its A Monopoly Board

According to All American, its case would thus allow the Supreme Court to decide not only the CFPB’s constitutionality but the equally important question of what remedy follows from a structural separation-of-powers violation.

Do Not Pass Go. Do Not Collect $200. Go Directly to Jail…ehemmm…the US Supreme Court.

Rather than wait for a decision from the Fifth Circuit in its interlocutory appeal from the district court’s ruling upholding the CFPB’s constitutionality, All American Check Cashing has filed a Petition for a Writ of Certiorari Before Judgment with the U.S. Supreme Court.  (The Fifth Circuit heard oral argument in March 2019 and last month directed the parties to file letter briefs regarding what action the court should take in light of the en banc Fifth Circuit’s decision in Collins v. Mnuchin that held the FHFA’s structure is unconstitutional.)

All American argues that “there is nothing to be gained by waiting [for the Fifth Circuit’s decision]: The case for the constitutionality of the agency, pro and con, has already been exhaustively explored in the circuit courts in numerous thoughtful opinions, beginning with [the D.C. Circuit’s en banc PHH decision].”  It also argues that its case is a better vehicle than Seila Law to resolve the questions of the CFPB’s constitutionality and the appropriate remedy for actions taken by an unconstitutional agency.  (The briefs on Seila Law’s petition for certiorari have been distributed for the Supreme Court’s October 11 conference.)

All American’s primary argument for why its case is a better vehicle is that, unlike Seila Law, its case “squarely presents” the question of whether, even if the agency’s structure is unconstitutional, former Acting Director Mulvaney’s ratification of the CFPB’s challenged action cured any constitutional defect.  Although the CFPB made the ratification argument in Seila Law, it was not addressed by either the district court or the Ninth Circuit (which both held that the CFPB’s structure is constitutional).  Accordingly, All American contends that if the Supreme Court were to grant certiorari in Seila Law and reverse the Ninth Circuit on the CFPB’s constitutionality, the CFPB could argue on remand that the ruling had no effect on the Ninth Circuit’s judgment (which affirmed the district court’s refusal to set aside the CID) because it was supported by the alternative grounds of ratification.  In addition, All American argues that the Supreme Court “could not cleanly reach the ratification issue in Seila Law even if it wanted to address that question without the benefit of either lower court’s consideration of the matter.”

According to All American, its case would thus allow the Supreme Court to decide not only the CFPB’s constitutionality but “the equally important question of what remedy follows from a structural separation-of-powers violation.”  It argues that severance of the CFPA’s “for cause” removal provision is not an adequate remedy because “the Director’s removal provision cannot be severed without inflating the President’s power relative to Congress and transforming the CFPB into something Congress never would have created.”  More specifically, it asserts that “there is no reason to think that Congress would have given up its own appropriations and oversight powers while granting the President increased power over 18 preexisting federal consumer-protection statutes.  But that is exactly what severing the statute would do.” (emphasis included).

In addition, All American asserts that even assuming the removal provision was severable, that would address the constitutional problem going forward but “would do nothing to ameliorate All American’s past injury from being subject to an enforcement action initiated and prosecuted against it by an unconstitutional agency.” (emphasis included).  All American claims that such injury requires dismissal of the CFPB’s action.  It further argues that actions by an agency that is structured unconstitutionally, as distinguished from “defects in a particular officer’s title,” are null and cannot be ratified.

Finally, All American makes the alternative argument that the Supreme Court should, at a minimum, grant its petition as a companion case to Seila Law in the event it grants that petition.  It states that the Supreme Court “has repeatedly granted certiorari before judgment when, as here, a complementary companion case offers the opportunity to decide all aspects of an important question of constitutional law.”  All American argues that the Supreme Court “should grant both petitions in order to consider the merits and remedies questions together if the Court is not inclined to review All American’s case alone.”

House Dems defend CFPB constitutionality in Supreme Court filing

  • The House of Representatives filed an amicus brief, asking the Supreme Court to reject a challenge to the leadership structure of the Consumer Financial Protection Bureau (CFPB), according to a press release Monday.
  • The Justice Department asked the high court last month to hear Seila Law v. CFPB, a case that argues the regulator’s setup is unconstitutional because it gives the president the power to fire the director only “for cause.” CFPB Director Kathy Kraninger also wrote lawmakers last month, indicating she backed the DOJ’s position that the “for-cause” provision unfairly impedes President Donald Trump’s ability to control the executive branch.
  • The Supreme Court did not add the Seila case to its docket for its October term, but the issue of CFPB constitutionality has prompted another company to petition the court.

“In the grip of President Trump, we have already seen the Consumer Bureau abandon its mission to protect the American people from unfair and predatory conduct,” House Speaker Nancy Pelosi, D-CA, said in the press release. Indeed, the number of enforcement investigations the bureau has initiated has dropped precipitously, from 63 in fiscal 2017 to 15 the following year, The Wall Street Journal reported.

Kraninger, for her part, told bureau employees in an email last month that litigation over the bureau’s constitutionality had “caused significant delays” with regard to enforcement and regulatory actions.

But House Financial Services Committee Chairwoman Maxine Waters, D-CA, in the press release, took issue with Kraninger’s stance. “Despite previous court rulings that made it clear that the Consumer Bureau is constitutional and here to stay, Kathy Kraninger insists on working to undermine and politicize the agency at the expense of hardworking Americans.”

During her nomination process last year, Kraninger did not indicate a position on the matter, saying “the ultimate question of the constitutionality of the Bureau’s structure is one for Congress or the courts to resolve.”

Companies are using the bureau’s structure to challenge enforcement actions against them. In Seila, for example, a California law firm accused of making sales pitches to indebted consumers is trying to curb a CFPB investigation into its practices by arguing the bureau was set up in violation of the constitutional separation of powers.

Another company filed a writ of certiorari with the Supreme Court last week despite waiting for the U.S. Court of Appeals for the Fifth Circuit to issue a ruling.

“There is nothing to be gained by waiting [for the Fifth Circuit’s decision]: The case for the constitutionality of the agency, pro and con, has already been exhaustively explored in the circuit courts in numerous thoughtful opinions,” All American Check Cashing wrote to the high court in reference to the company’s case against the CFPB.

Pelosi defended previous rulings in her comments Monday. “As the lower courts have recognized in upholding the constitutionality of the for-cause provision, ‘Congress established the independent CFPB to curb fraud and promote transparency in consumer loans, home mortgages, personal credit cards, and retail banking,'” she said in the press release. “By not defending the Consumer Bureau’s independence, the Trump Administration is choosing special interests over America’s consumers.”

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