On February 21, a group of 23 state attorneys general (AGs) filed an amicus brief in support of the union representing CFPB workers in the union’s request for a preliminary injunction challenging the recent efforts to halt CFPB operations, cancel contracts, and terminate the employment of probationary employees, among other actions (covered by InfoBytes here). This was the second amicus brief filed by state AGs within the past week in support of litigation against the CFPB (the other was in the Mayor and City of Baltimore case; covered by InfoBytes here).

The AGs’ brief was substantially similar to the brief it filed in the Baltimore case, with near identical language and arguments. Specifically, the AGs argued they and their residents will suffer “irreparable harm” if the CFPB is defunded and ceases to function. Overall, the states argued the loss of the CFPB’s statutorily mandated consumer complaint system, its access to data the Bureau is required to collect under the Dodd-Frank Act, and distributions from the Civil Penalty Fund warrant injunctive relief.

The brief expanded on the AGs’ argument that state-chartered banks will be unfairly disadvantaged if the CFPB ceases to have supervisory duty over very large banks. The AGs argued the other federal financial regulators cannot “pick up [the CFPB’s] slack” because the Treasury previously recommended that Congress transfer consumer protection functions to the CFPB’s oversight in the aftermath of the 2008 financial crisis. The AGs argued that, as a result, the CFPB is the only federal entity authorized to supervise and enforce the abusive provisions of the CFPA against national banks. According to the AGs, the states are unable to enforce such provisions unless the CFPB promulgates regulations — which it has not done. Therefore, the AGs alleged consumers were at risk of suffering harm from these unsupervised large banks and such harm should be prevented through a preliminary injunction.

Additionally, the AGs updated the brief to include references to Colorado, Minnesota, California and North Carolina working with the CFPB to conduct joint examinations of student loan servicers to bolster its argument that the CFPB partnered with states to provide supervisory support.

Visit our resource center, CFPB Pause: Where From Here?, to stay on top of the latest and what it may mean for the federal and state regulatory and enforcement landscape.