Appellate Circuit

The Ninth Circuit Quickly Disposes of Selia Law. We Doubt it’s Over.

A unanimous panel of the U.S. Court of Appeals for the Ninth Circuit ruled that the CID issued to Seila Law was validly ratified by Director Kraninger and affirmed the district court’s decision granting the CFPB’s petition to enforce the CID.


Ninth Circuit quickly dispose of the Selia Law case prior to Biden’s inauguration and anticipated sweeping changes in the CFPB’s administration. LIT would imagine that Selia Law will appeal for a circuit en banc rehearing, and failing that, revisit the US Supreme Court about this opinion from the Ninth Circuit, relying on the new administration which will be in place by the time their petition is submitted to the highest court.

Ninth Circuit Judge Paul Watford Authored the Opinion for the 3-Panel

Ninth Circuit rules CID issued to Seila Law was validly ratified by Director Kraninger

Originally Published: Dec. 31, 2020 | Republished by LIT; Jan 4, 2021

Ninth Circuit Opinion: Consumer Finance Financial Bureau v. Selia Law, 29th Dec., 2020

Less than six weeks after hearing oral argument, a unanimous panel of the U.S. Court of Appeals for the Ninth Circuit ruled that the CID issued to Seila Law was validly ratified by Director Kraninger and affirmed the district court’s decision granting the CFPB’s petition to enforce the CID.

After ruling that the CFPB’s structure was unconstitutional because its Director could only be removed by the President “for cause,” the Supreme Court remanded the case to the Ninth Circuit to consider the CFPB’s argument that former Acting Director

Mulvaney’s ratification of the CID issued to Seila Law cured any constitutional deficiency.

Because it had ruled that the CFPB’s leadership structure was constitutional, the Ninth Circuit had not previously considered the CFPB’s ratification argument. Following the Supreme Court’s decision, the CFPB filed a declaration with the Ninth Circuit in which Director Kraninger stated that she had ratified the Bureau’s decisions to: issue the CID to Seila Law, deny Seila Law’s request to modify or set aside the CID, and file a petition in federal district court to enforce the CID.

On remand, the Ninth Circuit determined that Director Kraninger’s ratification made it unnecessary for the panel to decide whether the CID was validly ratified by former Acting Director Mulvaney.

The Ninth Circuit concluded that Director Kraninger’s ratification remedied any constitutional injury that Seila Law may have suffered due to the defect in the Bureau’s structure. According to the Ninth Circuit, “Seila Law’s only cognizable injury arose from the fact that the agency issued the CID and pursued its enforcement while headed by a Director who was improperly insulated from the President’s removal authority.”

In the court’s view, the CID’s ratification by “[a] Director well aware that she may be removed by the President at will” removed “[a]ny concerns that Seila Law might have had about being subjected to investigation without adequate presidential oversight and control.”

In ruling that the ratification was valid, the Ninth Circuit rejected Seila Law’s argument that until the Supreme Court invalidated the for-cause removal provision, the CFPB was exercising its powers unlawfully, which in turn rendered all of the agency’s prior actions void at the time they were taken and therefore incapable of being ratified.

The Ninth Circuit determined that Seila Law’s argument was “largely foreclosed” by the Ninth Circuit’s decision in CFPB v. Gordon, which involved former Director Cordray’s ratification of the CFPB’s enforcement action against Gordon.

Director Cordray ratified the action after his recess appointment was called into question by the U.S. Supreme Court’s Canning decision and he was reappointed and confirmed by the Senate. In that case, the Ninth Circuit ruled that the enforcement action was validly ratified by Director Cordray.

In the Ninth Circuit’s view, as in Gordon, the constitutional infirmity at issue in Seila Law related to the Director alone, not to the legality of the CFPB itself. Therefore, since the CFPB as an agency had the authority to issue the CID in 2017, the CID was not void and could be validly ratified by Director Kraninger.

The Ninth Circuit concluded that “taken together, [the D.C. Circuit’s 1996 decision in] Legi-Tech and Gordon confirm that ratification is available to cure both Appointments Clause defects and structural separation-of-powers defects.”

(In Legi-Tech, the Federal Election Commission brought an enforcement action while two individuals were impermissibly serving as Commission members. After the presence of those members was held to violate the separation of powers, the Commission reconstituted itself and ratified the enforcement action. The D.C. Circuit held that the ratification was valid.)

The Ninth Circuit also rejected Seila Law’s argument that Director Kraninger’s ratification was invalid because it took place outside the three-year SOL for bringing an enforcement action against Seila Law.

According to the Ninth Circuit, this argument failed because the SOL “pertains solely to the bringing of an enforcement action, which the CFPB has not yet commenced against Seila Law.”

It observed that the purpose of a CID is to assist the Bureau in determining whether Seila Law has engaged in violations that could justify bringing an enforcement action and that the question of whether Seila Law could successfully assert an SOL defense in a future enforcement action “had no bearing on the validity of Director Kraninger’s ratification.”

Last month, in RD Legal Funding, the Second Circuit issued a summary order affirming the district court’s holding that the Dodd-Frank Act’s for-cause removal provision is unconstitutional, reversing its holding that the provision is not severable, and remanding the case to the district court to consider the validity of Director Kraninger’s ratification of the enforcement action against RD Legal.

All American Check Cashing, another case involving the ratification question, has been put on hold by the Fifth Circuit until the U.S. Supreme Court issues its decision in Collins v Mnuchin.

CFPB and All American Submit their Post Yellen Letters to the Fifth Circuit Resulting in Extra Briefing Requested

Will the Pro Se Burkes be afforded the same relief and supplemental briefing requested from CA5 in their Motion to Stay after Yellen?

Post Selia Law, How’s the CFPB Cases Going?

Bureau of Consumer Financial Protection v. Forster & Garbus, LLP (2:19-cv-02928) District Court, E.D. New York APR 26, 2021 Update Aug. 31, 2021: After the death of Judge Sandra Feuerstein , she has been replaced by Judge Joanna Seybert. There's a niggle about the stay in the case by CFPB but their July motion and argument seems weak, [...]

The Frazzled Sequel: Cato File another Amicus Brief into the Fifth Circuit’s All American Case And It’s Hard-Hitting

CATO argue that allowing the CFPB to carry on with unconstitutionally initiated actions would perpetuate the earlier constitutional violation.

Mick Mulvaney says in Congress, he only talked to lobbyists who gave him money

“If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

Originally Published: Apr. 25, 2018 | Republished by LIT; Jan 4, 2021

Want a favor from a member of Congress? Give him money. That was the advice Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau and head of the Office of Management and Budget, gave to a group of some 1,300 bankers and lending industry professionals at a conference in Washington, DC.

Mulvaney, a former South Carolina representative, said he would only meet with lobbyists who had donated to his campaign while speaking at the American Bankers Association conference on Tuesday, the New York Times reported.

“We had a hierarchy in my office in Congress,” Mulvaney said. “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

He did emphasize that at the top of the whom-he’d-talk-to ladder were his constituents — regardless of financial contributions — but lobbyists had to pay up.

John Czwartacki, a spokesperson for Mulvaney, tried to clean up on his boss’s eyebrow-raising remarks, telling the Times that Mulvaney was simply “making a point that hearing from people back home is vital to our democratic process and the most important thing our representatives can do.” He said that’s “more important than lobbyists and it’s more important than money.”

A CFPB spokesperson did not respond to further request for comment or clarification from Vox.

The payday lending industry donated more than $60,000 to Mulvaney’s past congressional campaigns.

Since Mulvaney took over at the CFPB, the government’s consumer watchdog, the bureau dropped sanctions against the online payday lender NDG Financial Corp., which was accused of running a “cross-border online payday lending scheme.” It scrapped another lawsuit against four Kansas-based payday lenders that allegedly stole millions of dollars from consumers’ bank accounts to pay debts they didn’t owe. The agency shut down a probe into World Acceptance Corp, which donated at least $4,500 to Mulvaney’s congressional campaigns. And the CFPB is reconsidering a rule that would have imposed restrictions on payday and short-term lenders, such as making sure borrowers would be able to pay them back.

Mulvaney also thought the government shutdown was “kind of cool” and wants to change the name of the CFPB

This is not the first time Mulvaney, whose name has been floated as a potential chief of staff (in case he needs a third Trump administration job), has sort of said the quiet part out loud. When the federal government shut down in January after Republicans and Democrats failed to reach a deal on funding the government, Mulvaney said he thought it was pretty neat that as OMB director, he got to do the honors. “I found out for the first time last night that the person who technically shuts the government down is me, which is kind of cool,” he said in an interview with Sean Hannity.

Mulvaney, who once described the CFPB as a “sick, sad” joke, has since taking over the agency sought to scale it back and undermine it. He has reportedly scaled back an investigation into the Equifax data breach, which left the information of more than 145 million Americans exposed, and stripped enforcement powers from the Office of Fair Lending and Equal Opportunity, the unit responsible for pursuing discrimination cases. Until last week’s $1 billion Wells Fargo fine, the CFPB hadn’t taken a single enforcement action since Mulvaney took over in November.

At the same American Bankers Association conference where he made the lobbyist comments on Tuesday, Mulvaney also said he wants to end public access to the bureau’s consumer complaint portal. Financial companies say that letting the public see complaints against it damages its reputation — in other words, outing their alleged bad behavior makes them look bad. “I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government,” Mulvaney said, holding up a copy of the Dodd-Frank financial reform law, according to the Wall Street Journal.

Beyond the policy and enforcement measures that threaten to roll back important protections for consumers, some of what Mulvaney has done at the CFPB has been symbolic, if not to say petty. In December, the CFPB renamed a fellowship program for law students and recent graduates that had honored Supreme Court Justice Louis Brandeis, who was known in the early 20th century as the “people’s lawyer” for taking on major moneyed interests, including J.P. Morgan’s railroad monopoly.

The fellowship is now named after Joseph Story, a 19th-century Supreme Court justice known for his defense of property rights and economic liberty. Story was a staunch opponent of President Andrew Jackson, of whom Trump is a professed fan, so it’s not clear exactly what Mulvaney was going for in all of this.

His latest crusade in the land of things that don’t matter: the acronym of the CFPB. He says it actually should be BCFP, for the Bureau of Consumer Financial Protection, its official name in Dodd-Frank. He wants to emphasize the bureaucratic part of it. “I’m trying to get in the habit of now saying the ‘BCFP.’ It’s really, really hard to do that when you’ve said the CFPB for so long,” Mulvaney said at the Tuesday ABA conference.

According to the Associated Press, the bureau has rolled out a new logo and requested that its entry in the AP Stylebook be changed to the Bureau of Consumer Financial Protection. If Mulvaney does get the change, the entire agency would have to change email addresses — right now, they’re But he’s a man on a mission. “The CFPB doesn’t exist,” he said on Tuesday.

The Ninth Circuit Quickly Disposes of Selia Law. We Doubt it’s Over.
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