In an opinion today, Judge Preska dismissed the Consumer Finance Protection Bureau (“CFPB”) from an action after finding that, because the CFPB’s structure was unconstitutional, it lacked the authority to bring claims under the Consumer Finance Protection Act (“CFPA”).
The CFPB and the New York Attorney General had originally brought claims against companies that offered cash advances to consumers waiting on payouts from settlement agreements, which were allegedly usurious loans under New York law. Judge Preska challenged whether the CFPB could bring these claims in the first place, adopting the dissenting opinion of Judge Brett Kavanaugh from a recent D.C. Circuit decision. The majority in that case found that the CFPB was constitutional (a finding that did not bind Judge Preska). Judge Kavanaugh had argued that the CFPB was unconstitutional because its head, a single director, could not be removed by the President without cause and was not beholden to any other commissioners or board members at the CFPB. According to Judge Kavanaugh, this violated the principle of separation of powers by divesting executive authority from the President in violation of Article II’s command that “The executive Power shall be vested in a President of the United States of America.”
Judge Preska did find, however, that the New York Attorney General separately had the authority to bring claims under the CFPA and thus allowed the claims to proceed.