Politics & Money

Payday lender challenges CFPB constitutionality in Supreme Court petition

Asks Supreme Court to rule on CFPB structure

A payday lender, All American Check Cashing, is asking the Supreme Court to rule on the constitutionality of the Consumer Financial Protection Bureau.

The lender is alleging that the CFPB’s leadership is unconstitutional and saying the separation-of-powers should be judicially redressed, according to an article by Brittany De Lea for FOXBusiness.

From the article:

All American is arguing that the agency’s structure is unconstitutional, based on how its director can be removed, as well as “other anomalous features of the agency.” All American, of Mississippi, asked the U.S. Supreme Court to take up the case even though an appeals court has yet to review it.

But HousingWire readers know this argument is not new.

Back in 2017, the CFPB’s leadership structure was declared unconstitutional by the Court of Appeals for the District of Columbia Circuit in a 2-1 vote.

The CFPB fought that ruling, asking the court to rehear the case en banc, meaning that it wanted the entire court to hear the case, rather than the three judges who ruled on the case previously.

As it stands now, President Donald Trump cannot fire the CFPB director unless it’s for cause. The previous decision made the CFPB director fireable at will, but that’s not the case anymore as the case continues to be challenged in court.

And most recently, CFPB Director Kathy Kraninger weighed in, siding against her own job security by agreeing with the administration that the CFPB director should be allowed to be fired by the President at will.

But now, All American wants to send the decision straight to the Supreme Court, and is asking it to address the proper judicial remedy to redress the violation if the leadership structure is declared unconstitutional, meaning it could potentially undo enforcement actions taken because “actions taken by unconstitutionally structured agencies are nullities,” the petitioners argue.

However, the article explained that these actions could potentially be ratified by a constitutionally appointed director.

From the article:

While there are other challenges to the agency’s structure awaiting review, Gibson Dunn partner Helgi Walker, a lawyer for All American Checking Cashing, noted that their case is the ideal candidate because it asks “the absolutely essential question” of what an unconstitutionally-structured CFPB means as a “practical matter.”

“What good does it do for a litigant to ‘win’ on the constitutional question if the government action against him simply goes on as if the constitutional violation never happened, as some lower courts have held?” Walker said in a statement. “That is where the constitutional rubber hits the road, and if it is not addressed the current uncertainty about what should actually happen in cases involving the CFPB will only grow.”

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