Bradley Partner Robert Maddox was quoted in an article regarding a recent Fifth Circuit ruling that the Consumer Financial Protection Bureau’s (CFPB) funding structure is unconstitutional -- a violation of the separation of powers. The ruling garnered strong reactions from politicians and experts alike.
“Both in litigation and enforcement, what are people going to do differently? Well, nothing honestly,” Maddox said. “You may have a few companies that are in litigation or enforcement with them, that may try to utilize this, but it's a long-term path. If you're walking into a court in D.C., California, or Florida, or anywhere outside of Texas, Louisiana, Mississippi, and tried to say look, this court down and in New Orleans said, ‘it's unconstitutional, so we're not going to produce documents,’ the CFPB knows that [the fifth circuit] doesn't roll this court.”
There is concern for the future and longevity of the CFPB after the Fifth Circuit decision, but Maddox explained the next steps of the process if the Supreme Court upholds this ruling.
Maddox said, “Should this decision be upheld by the Supreme Court, the CFPB may face a smaller budget, but the overall mission and activity will remain the same. The bureau will likely just require more involvement from other regulators and states’ attorneys general to meet its enforcement goals.”
“I don't think you're going to see a massive change from a regulatory standpoint, or an enforcement standpoint,” Maddox continued. “But the one thing we always consider in litigation is how much does this cost… Which is why you get trade associations like the one we have in this Fifth Circuit case fighting because no one want[s] to draw the ire of the bureau. Think about it this way, some of these cases for seven, eight years, but what if [the bureau] didn't have unlimited resources? What if they had to act like a rational actor would in a piece of litigation, they couldn't drag this out for as long or hold some of these companies hostage because they have a limitless purse with which to work from. So, I think [they’ll] probably go back and they'll ratify everything that they've done today. Just like they did with Seila and they will make sure the Bureau continues on.”
The full article, “Fifth Circuit finds CFPB funding structure unconstitutional,” was published October 21, 2022, in Dodd Frank Update. (login required)