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Boston — Today, consumer advocates pushed ahead with their lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB) unlawful creation and operation of the Trump-era “Taskforce on Federal Consumer Financial Law.” Created by former CFPB Director Kathy Kraninger, the Taskforce ran roughshod over the requirements of the Federal Advisory Committee Act (FACA) — a law designed to ensure advisory committees serve the public interest. The Taskforce was stacked with representatives of the financial services industry and lacked a single proponent of robust consumer protections, in violation of FACA’s requirement that committee members represent a balance of views. The Taskforce issued a final report in January that parrots the financial industry’s agenda to resist consumer financial protections.
In their court filing today, Democracy Forward, the National Association of Consumer Advocates, U.S. Public Interest Research Group, and consumer law expert Professor Kathleen Engel called the CFPB’s arguments in defense of the Taskforce “both legally and factually untenable” and urged the court to order all necessary relief to remedy the harms caused by the Taskforce and uphold the law.
Upon filing today’s motion, Democracy Forward, the National Association of Consumer Advocates, U.S. Public Interest Research Group, and consumer law expert Professor Kathleen Engel issued the following statement:
“The CFPB must be held accountable for breaking federal law to advance the interests of the financial services industry under the last administration. The Trump-era Taskforce on Federal Consumer Financial Law was stacked with champions of financial deregulation, operated behind closed doors, failed to serve any public interest, and ultimately, produced a tainted final report. All remaining Taskforce documents should be released publicly, the CFPB should be forced to place a disclaimer on the report itself, and any further use of the report by the CFPB should be blocked.”
The unlawful Taskforce was subject to FACA’s requirements but violated the statute at every turn. In an effort to avoid accountability for violating FACA, the CFPB has wrongly argued that the Taskforce is exempt from FACA’s requirements because it falls within the law’s exemption for committees composed wholly of certain kinds of federal employees. However, plaintiffs state that: “As a matter of both statutory text and common sense, the Taskforce’s members were not full-time or permanent part-time federal employees.”
Because the CFPB asserts FACA did not apply, it has admitted that it made no effort to comply with the law’s requirements:
The CFPB admitted it did not make necessary consultations before creating the Taskforce — a process FACA requires in order to prevent wasteful and biased advisory committees;
The CFPB acknowledged it failed to ensure the public had contemporaneous and complete access to the Taskforce’s records and meetings; and
The CFPB conceded it did not make a plan to ensure that the Taskforce’s membership would represent a balance of views.
Importantly, as today’s filing states, the CFPB’s argument and approach “has no limiting principle: there is no reason why other agencies could not use a similar strategy to establish other advisory committees-in-all-but-name, rendering FACA a nullity.”
A federal court denied the Trump administration’s attempt to dismiss the lawsuit in February. The lawsuit was filed in the U.S. District Court for the District of Massachusetts on June 16, 2020. The plaintiffs are represented by Democracy Forward and David A. Nicholas, Of Counsel to Wolf Popper LLP. Learn more about the case here.
Democracy Forward is a nonprofit legal organization founded in 2017 to litigate challenges to unlawful executive branch action on behalf of organizations, individuals, and municipalities. The organization has taken 650 legal actions and reversed dozens of harmful policies. Democracy Forward is expanding its work, building on its success to confront unlawful threats to democracy and social progress.
The National Association of Consumer Advocates (NACA) is a nonprofit association of private and public sector attorneys, legal services attorneys, law professors, and law students whose primary focus involves the protection and representation of consumers. NACA is actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means.
U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. U.S. PIRG is part of The Public Interest Network, which operates and supports organizations committed to a shared vision of a better world and a strategic approach to getting things done.
Kathleen Engel is a prominent scholar of consumer law and finance. She has written extensively on the law and economics of mortgage markets, as well as the subprime crisis, and she co-authored a prize-winning book on the 2008 financial crisis. Engel is a Research Professor of Law at Suffolk University and has held a number of public service positions, including on the Federal Reserve Board’s Consumer Advisory Council, the CFPB’s Consumer Advisory Board, and Vice-Chair of the Board of Consumer Reports. Professor Engel’s views and opinions expressed in this litigation are her own and do not necessarily reflect the views of Consumer Reports.
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