January 23, 2017

Attorney General George Jepsen today led a group of 16 other attorneys general in filing a motion to intervene in a federal appeals case in order to defend the constitutionality of the federal Consumer Financial Protection Bureau (CFPB).

The case – PHH Corporation, et al. v. Consumer Financial Protection Bureau – is currently before the United States Court of Appeals for the District of Columbia Circuit. In an October 2016 ruling, a divided court found the structure of the CFPB unconstitutional. The CFPB filed a petition for rehearing of the decision, and that petition is currently pending before the court. To this point, the Obama administration had vigorously defended the CFPB in the appeal.

In today's motion to intervene in the litigation, the attorneys general argue that they have a vital interest in defending an independent and effective CFPB. They have used their authority to bring civil actions in coordination with the CFPB to protect consumers against unfair, deceptive and abusive financial practices. They argue that the court's ruling, if permitted to stand, would undermine the power of state attorneys general to effectively protect consumers against abuse in the consumer finance industry, and significantly lessen the ability of the CFPB to withstand political pressure and act effectively and independently of the President.

They further argue that, as a result of the presidential election, it is urgent that attorneys general intervene in this case because President Donald Trump has expressed strong opposition to the Dodd-Frank reforms that created the CFPB. According to media accounts, President Trump's administration is likely to fire the current director of the CFPB and take other steps that could directly and negatively impact how – and if – this case proceeds, including by abandoning the legal defense of the agency.

"The CFPB is the cop on the beat, protecting Main Street from Wall Street misconduct," said Attorney General Jepsen. "It was structured by Congress to be a powerful and independent agency that would protect consumers from the abuses of Wall Street, banks, and other large financial institutions. That mission is still critical to consumers today. However, the Trump Administration has said it intends to weaken the CFPB. That calls into question whether the new administration will adequately defend the CFPB and the American public it protects."

Attorney General Jepsen continued, "Contrary to his populist rhetoric, the President's failure to support the CFPB would be a gift to powerful financial interests and a bitter broken promise to regular Americans he vowed to defend. State attorneys general were the first voices to warn of the financial fraud that lead to the 2008 financial crisis and remain on the front lines of preventing deceptive and abusive financial practices. The Dodd-Frank financial reform law established a system under which state attorneys general work in effective coordination with the CFPB to enforce financial consumer protection laws. Should the Trump Administration fail to adequately defend the CFPB in this litigation, state attorneys general – and the public – could lose the benefits of a powerful enforcement partnership. State attorneys general have a vested interest in this case – one that may not continue to be represented as this litigation progresses – and for that reason we believe it is important that the court grant attorneys general the opportunity to participate in this litigation going forward."

Congress created the CFPB in 2010. The agency's purpose is to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace. During its 2016 fiscal year, the CFPB's supervisory actions resulted in financial institutions providing more than $58 million in redress to over 516,000 consumers, according to its report to Congress. The agency receives thousands of consumer complaints every week from consumers across the country.

Joining Connecticut on today's motion are attorneys general from Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.

Assistant Attorneys General John Langmaid, Jane Rosenberg and Matthew Budzik, head of the Finance Department, are assisting the Attorney General with this matter.

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