21 States Sue WH Over Bureau Funding   12/23 06:16

   

   NEW YORK (AP) -- A coalition of 21 attorneys general from Democratic-led 
states sued the Consumer Financial Protection Bureau and its director, Russell 
Vought, on Monday, asserting that the White House's argument to withhold funds 
from the consumer protection agency is unconstitutional.

   The lawsuit has to do with the Trump administration's argument that the CFPB 
can only be funded by the Federal Reserve's profits. The Federal Reserve has 
been running a loss since 2022, a side effect of the Fed raising interest rates 
sharply to combat inflation, because it holds bonds that pay low interest from 
the pandemic but it needs to pay out higher amounts of interest to the banks 
that hold their deposits with the bank.

   The White House has argued for several months that the CFPB cannot lawfully 
draw funds to fund its operations from the Fed if the Fed does not have 
"combined earnings" to allocate to the bureau. Without additional funds, the 
CFPB is expected to deplete its operating funds completely in January.

   The lawsuit, filed in U.S. District Court in Eugene, Oregon, seeks to force 
the Trump administration to fund the CFPB.

   "We're asking the court to order the Consumer Financial Protection Bureau to 
seek available funding and do its job," California Attorney General Rob Bonta 
said at a press conference.

   The phrase "combined earnings" is found in the text of the Dodd-Frank Act, 
the law that created the CFPB more than a decade ago. Legislators and 
policymakers from the time Dodd-Frank was crafted have argued that the phrase 
"combined earnings" was not meant to infer the Fed needed to make an actual 
profit to fund the CFPB. The White House's interpretation of the Dodd-Frank Act 
is being litigated in a separate lawsuit filed by the CFPB employees' union 
against Vought.

   The Democratic AGs argue that the CFPB was lawfully created by Congress and 
the White House cannot pick and choose which parts of the government it wishes 
to fund or not. Further, the CFPB is required to provide consumer complaint 
information to the individual states to stop bad actors, and if the CFPB is not 
operating, it cannot meet its statutory requirements.

   "Defunding the Consumer Financial Protection Bureau will make it harder to 
stop predatory lenders, scammers, and other bad actors from taking advantage of 
New Yorkers," said Attorney General Letitia James of New York.

   A spokeswoman for Vought did not respond to an email for comment.