Texas Office of the Attorney General Demands R.E.S.P.E.C.T.

AG Paxton Joins Coalition Urging CFPB to Restore States’ Authority to [Claim it Can] Protect Consumers

AUSTIN – Attorney General Ken Paxton  joined a 12-state coalition – led by Indiana and Arkansas – in support of a proposal by the Consumer Financial Protection Bureau (CFPB) to rescind a 2017 CFPB rule and replace it with a new one governing small, short-term loans. The existing rule ignores the states’ traditional role as the lead consumer protection authorities, and it harms consumers’ freedom to make decisions about the types of financial products that best serve them.

In a letter to CFPB Director Kathleen Kraninger, Attorney General Paxton and his counterparts stated that “the proposed rule respects the states’ role in maximizing consumers’ welfare by ensuring both that consumers are protected from illegal practices and that they have access to credit.”

“Texas and other states have designed a variety of regulatory approaches to small-dollar lending that are best-suited to the unique needs of their residents, rather than a one-size-fit-all directive from Washington,” Attorney General Paxton said. “No CFPB rule should intrude on the states’ responsibility to ensure that their residents can obtain credit on fair terms.”

Indiana, Arkansas and Texas are joined in the letter to the CFPB by Alabama, Georgia, Kansas, Louisiana, Oklahoma, South Carolina, South Dakota, Utah and West Virginia.

Last year, Attorney General Paxton led a 14-state brief challenging the constitutionality of the CFPB and its Arbitration Rule, which would have increased the cost of credit for Americans and deprived them of a resource for resolving disputes between banks and consumers. President Trump ultimately signed into law a joint resolution passed by the U.S. Senate and U.S. House that rescinded the rule.

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AG Paxton’s Office Responds to Letter from House Subcommittee Attempting to Interfere in State Operations

AUSTIN – Attorney General Ken Paxton’s office today rejected a demand from the chairmen of two U.S. House Ways and Means subcommittees to provide confidential documents and information related to a letter the attorney general sent to the U.S. Department of Health and Human Services (HHS) last year, urging repeal of an unlawful Obama-era rule on child welfare funding that harms children and families by limiting adoption agencies’ access to public resources based on the religious beliefs of agency employees. The attorney general rejected the House subcommittees demands because the Subcommittee’s attempt to exercise control over core state functions violates constitutional principles of federalism.

In a letter to U.S. Reps. John Lewis and Danny Davis, Texas First Assistant Attorney General Jeff Mateer explained that Texas is not a subdivision of the federal government, but operates as a dual sovereign within the Union. The Supreme Court has recognized that preserving comity between the federal and state governments is a core value of our Constitution and Congress lacks the power to oversee a State’s exercise of its sovereign functions.

“Congress may use its spending power to encourage a State to adopt federal programs.  That power, however, does not give a Congressional subcommittee authority to oversee a State’s exercise of a core sovereign function in determining whether that program has created a legal dispute between the State and the United States government,” First Assistant Attorney General Mateer wrote in the letter. “Nor does it give Congress authority to oversee a State’s decision to challenge such a rule solely because the State disagrees with a massive shift in federal agency policy governing the program without any underlying change in federal law.”

The letter also notes the Supreme Court has clearly stated that Congress is not “a law enforcement or trial agency” and cannot investigate “solely for the personal aggrandizement of the investigators or to ‘punish’ those investigated.” First Assistant Mateer directed the Subcommittee to submit a public records request for non-privileged documents outside of the scope of potential litigation.

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