New York has joined over 20 other states in supporting two lawsuits against the shuttering of the Consumer Financial Protection Bureau. New York State Attorney General Letitia James and attorneys general from 21 other states and the District of Columbia filed an amicus brief in the U.S. District Court for the District of Maryland Thursday and another in the U.S. District Court for the District of Columbia Friday arguing consumers would face “significant harm” if the CFPB were dismantled.
“Eliminating the CFPB will hurt everyday people and benefit billionaires like Elon Musk and his friends,” James said Thursday. “The CFPB has put billions of dollars back in the pockets of Americans by going after predatory lenders, deceptive companies and slashing junk fees. The only reason to get rid of this watchdog agency is to protect bad actors.
“Working families need the CFPB, especially as rising prices are making it hard to make ends meet and put food on the table. My office is leading this coalition to help protect the agency that has protected all of us.”
Here’s what to know.
What the coalition of attorneys general is saying
New York has joined over 20 other states in supporting two lawsuits against the shuttering of the Consumer Financial Protection Bureau.
In both amicus briefs, the coalition of attorneys general raise concerns about consumers not reporting fraud or deception issues as well as less oversight of big banks and the possible loosening of financial institutions’ regulatory compliance as a result of the CFPB shut down.
According to the briefs, states have collaborated with the CFPB on the following:
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The CFPB’s consumer-complaint portal, which fields around 25,000 consumer complaints each week.
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The examination of state-chartered large banks and nonbank entities.
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And law enforcement, including New York-specific instances of stopping improper debt collection, inaccurate and misleading remittance transfers and harmful subprime auto lending and helping shut down an illegal debt-relief scheme.
“The sudden withdrawal of these CFPB services, supervision and collaborative assistance will thus inflict immediate harm on states and their residents,” the brief states.
Additional issues that have arisen as a result of the CFPB shut down, according to the briefs, include the deactivation of the Civil Penalty Fund, which distributes relief to consumers who have been wronged by someone the CFPB has taken legal action against, the absence of a federal regulator to examine very large banks for compliance with consumer financial-protection laws and the greater responsibility states are now forced to take on in a short amount of time.
What happened to the Consumer Financial Protection Bureau?
On Feb. 1, the Trump administration fired CFPB Director Rohit Chopra and appointed Office of Management and Budget director Russel Vought as the acting director of the agency who immediately ordered the CFPB to stop its work and said he would decline additional funding for the agency, USA TODAY reported.
The CFPB website’s homepage went dark shortly after Vought wrote in a Feb. 8 post on X that the agency’s funding was “excessive,” adding, “This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”
The shut down launched protests and a federal lawsuit by the National Treasury Employees Union, which represents CFPB staff, Reuters said, arguing Vought’s actions violated the Constitution by undercutting Congress’ power to set and fund the agency’s mission.
However, the Trump administration agreed to pause layoffs and funding cuts at the CFPB Friday, USA TODAY reported. In the order by U.S. District Judge Amy Berman Jackson, the Trump administration “shall not delete, destroy, remove, or impair any data or other CFPB records,” except as permitted by federal law until at least March 3, the date of the next court hearing.
“It is further ordered that Defendants shall not terminate any CFPB employee, except for cause,” the order states.
What it could mean for you: Consumer Financial Protection Bureau ordered to stop work
What does the Consumer Financial Protection Bureau do?
Created after Congress and President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as the Dodd-Frank Act, in July 2010, the CFPB is an independent government agency responsible for protecting consumers in the financial industry.
Since it was created, the agency has provided more than $21 billion in consumer relief in the form of monetary compensation, principal reductions, canceled debts and more for 205 million consumers or consumer accounts, according to the bureau, but those critical of the agency have said the CFPB is exceeding its legal authority.
Under the Biden administration, the CFPB returned over $6 billion to consumers and imposed $3.2 billion in fines, according to the Consumer Federation of America.
The agency, which doesn’t receive direct funding from Congress but requests its budget from the Federal Reserve, was set up with the help of Massachusetts Senator Elizabeth Warren, who said in a post to X on Feb. 10, “Understand this: by trying to kill the Consumer Financial Protection Bureau, Elon Musk and Russ Vought are trying to make it easier for big banks to cheat you. It’s another way the Trump administration wants to reward the rich and powerful while hurting working people.”
Emily Barnes reports on consumer-related issues for the USA TODAY Network’s New York Connect Team, focusing on scam and recall-related topics. Follow her on Twitter and Instagram @byemilybarnes. Get in touch at [email protected].
This article originally appeared on Rockland/Westchester Journal News: NY argues against shuttering CFPB
