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AG Derek Schmidt asks U.S Court of Appeals to rule CFPB structure unconstitutional

Release Date: Jul 13, 2018

TOPEKA – (July 13, 2018) – The governance structure of the Consumer Financial Protection Bureau (CFPB) is unconstitutional, Kansas Attorney General Derek Schmidt has told a federal appellate court in New Orleans.

Schmidt, along with the attorneys general of 12 other states and the Governor of Maine, on Monday filed an amicus brief with the U.S. Court of Appeals for the 5th Circuit arguing that the CFPB’s structure violates the separation of powers by improperly limiting the constitutional authority of the president to remove the agency’s director from office. The Texas-led brief argues that the Constitution does not permit the consolidation of sweeping and unchecked executive powers in an administrative agency headed by a sole director who may be removed only for cause.

Kansas previously made the same argument in a separate case in the U.S. Court of Appeals for the District of Columbia Circuit. Earlier this year, that court ruled 7-3 against the Kansas position and upheld the constitutionality of the CFPB’s structure. Notably, the judges in dissent, who agreed with the Kansas position, were led by Judge Brett Kavanaugh, who now has been nominated to the U.S. Supreme Court.

“Charged with enforcing various federal consumer-protection laws, the CFPB is headed by a single director – not a board or a group of commissioners,” the states wrote this week in their 5th Circuit brief. “The structure is unprecedented. Before the CFPB’s creation, ‘no independent agency exercising substantial executive authority ha[d] ever been headed by a single person.’ As Judge Kavanaugh of the D.C. Circuit recently observed, ‘the Director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. government.’”

Schmidt said he hopes the 5th Circuit agrees with Kansas and disagrees with the D.C. Circuit. Such a disagreement between the appellate courts would need to be resolved by the U.S. Supreme Court. The case is Consumer Financial Protection Bureau v. All American Check Cashing Inc. A copy of the brief is available at http://bit.ly/2NPBDDs.

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