More than 200 Democrats call for CFPB preliminary injunction

More than 200 Democratic lawmakers signed a legal brief supporting the union representing Consumer Financial Protection Bureau employees in their legal pursuit to end the Trump administration’s efforts to dismantle the agency.

The 203 Democratic lawmakers signed an amicus — or “friend of the court” — brief in support of a preliminary injunction in the National Treasury Employees Union’s efforts to stop acting CFPB Director Russell Vought from undertaking mass firings. The NTEU sued Vought last month claiming he was illegally appointed and that his actions to eliminate the agency have undermined Congress’ power to make laws. The brief states that Vought’s actions seeking to fire hundreds of employees is “a brazen violation” and “blatant disregard” of both the Dodd-Frank Act and the Constitution’s separation of powers. 

“Congress exercised its power under Article I of the Constitution to legislate the creation of the CFPB and to require it to perform certain statutory functions,” the 42-page brief states. “Defendants cannot unilaterally undo Congress’s reasoned determination that consumers need a watchdog. Only Congress can do that.” 

Last month, U.S. District Judge Amy Berman Jackson of the District of Columbia District Court agreed to temporarily block the Trump administration from firing more employees at the CFPB. Berman Jackson is expected to issue an order on the case as early as Friday.

Last week, Vought was forced to rehire roughly 200 probationary and temporary employees after a federal judge in Maryland sided with 20 Democratic state attorneys general that their dismissals were unlawful. The state officials sued the Trump administration for conducting mass firings without first notifying the states, in violation of federal statute and regulations that govern reductions in force. 

To drive home their point, the lawmakers said that before passing the Dodd-Frank Act that created the CFPB, Congress went through an exhaustive process, holding more than 100 hearings and taking testimony from 560 witnesses that filled more than 12,000 transcript pages. The CFPB was given the authority to interpret and enforce 18 consumer protection laws, to supervise and regulate the largest bank and nonbank financial institutions, and to receive and respond to consumer complaints, among other legally mandated duties. 

“President Trump and Defendants seek to undo this progress by executive fiat, leaving consumers and financial markets unprotected,” the brief states. “There is no doubt as to their intent: It is to ‘shut down’ the CFPB.”

“In short, Congress’s reasoned decision-making — made in the wake of and in response to the 2008 financial crisis — resulted in the creation of the Bureau to support and prioritize consumer financial protection through a single government agency,” the brief states. “President Trump and Acting Director Vought cannot unilaterally eliminate a federal agency created by Congress. Although they claim to be issuing ‘routine’ directives that come at the start of any administration, their actions reveal a swift and concerted effort to dismantle the CFPB. They cannot do so under the Constitution.”

The lawmakers claim that shuttering the CFPB would leave many financial institutions unregulated. The brief cited nearly 40 pending enforcement actions that have been dismissed or suspended by Vought, claiming that the Trump administration is “sending a message to financial institutions that their unlawful conduct will now go unchecked.”

Without CFPB oversight and supervision, the lawmakers said that financial institutions “will be emboldened to engage in unfair, deceptive, and abusive practices in violation of consumer protection laws,” which they said not only hurts consumers but also puts smaller banks at a competitive disadvantage, creating market instability.

The brief was submitted by three attorneys for Public Justice: Hannah Kieschnick, Lucia Goin and Shelby Leighton; and by Douglas R. Jensen, a partner at the law firm Sher Tremonte LLP.