Numerous state AGs join actions to keep CFPB doors open

A passel of state attorneys general filed a pair of amicus briefs in support of parties opposed to the shuttering of the Consumer Financial Protection Bureau. Among other things, the attorneys general argue that the sudden shuttering of the federal consumer watchdog agency will give large banks and nonbank financial services providers carte blanche to engage in activities that not only hurt consumers but disadvantage small community banks.

"After all, the CFPB is the only federal entity that is statutorily authorized to supervise and bring enforcement actions against national banks under federal law in connection with the [Dodd-Frank Act]," stated the amicus brief filed on Feb. 20, 2025, in support of a request for a temporary injunction against the bureau's closure filed by the Mayor and the City of Baltimore in U.S. District Court for the District of Maryland.

The Dodd-Frank Act, enacted in the wake of the financial crisis of 2008, resulted from "the failure of the federal banking and other regulators to address the significant consumer protection issues detrimental to both consumers and the safety and soundness of the banking system," the attorneys general wrote.

Disadvantaging community banks

Similar arguments were made in a separate amicus brief filed in U.S. District Court for the District of Columbia in a case filed by the National Treasury Employees Union against Russell Vought in his official capacity as acting director of the CFPB.

"[T]here are several forms of irreparable harm that many states and state residents will suffer," if Vought's order that all CFPB employees cease work is not halted or reversed, that amicus brief stated.

Both groups asserted closure of the bureau would effectively eliminate supervision of and compliance with consumer-protection laws by very large banks. They noted that the Dodd-Frank Act was enacted, in part, because of the lack of a central regulator overseeing compliance with federal consumer financial protection laws by very large financial institutions and nonbank lenders.

"[I]n light of the CFPB's dormancy, there is no federal regulator that is currently examining very large banks, such as JPMorgan and Wells Fargo, for their compliance with consumer financial-protection laws. The absence of a functioning CFPB thus creates a regulatory vacuum even greater than what existed before the Great Recession," the brief filed in the Baltimore case stated.

"The very large financial institutions that compete with state-chartered banks will have carte blanche to loosen their regulatory compliance and profit accordingly – to the detriment of consumers – as was seen in the years leading up to the 2008 financial crisis. Meanwhile, state-chartered banks will remain subject to state supervision for their compliance with the same laws," the attorneys general warned.

Lost expertise

It's not just the examinations; it's the "invaluable" expertise and resources the CFPB brings to the regulatory process that will be lost, the attorneys general asserted.

For example, there is the CFPB's consumer-complaint system, which fields "approximately 25,000 consumer complaints about financial products and services each week," the attorneys general pointed out in the two amicus briefs noted. "Among other tasks, the CFPB's intake process identifies and prioritizes complaints," the amicus brief filed in the Treasury Union case stated.

"The Consumer Financial Protection Bureau protects Marylanders from businesses' deceptive practices and that can cost them significant amounts of money," said Maryland Attorney General Anthony G. Brown. "Maryland consumers cannot afford to lose this critical independent agency."

In addition to Brown, the attorneys general of at least 21 other states signed on to one or both of the amicus briefs filed in the two cases. Those states are Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New Jersey, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin and the District of Columbia.

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