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CFPB’s Bureaucratic Lawlessness—Real Consequences for Real People

NCLA Senior Litigation Counsel Michael P. DeGrandis hosts Lunch & Law with Crystal Moroney and attorney Ron Canter to discuss a shocking abuse of process perpetrated by the Consumer Financial Protection Bureau.

To date, Ms. Moroney is nearing the fourth year of a CFPB investigation into her small law firm—an investigation that has included demands for attorney-client privileged documents, multiple Civil Investigative Demands (CIDs) for the same information, and intimidation of her clients. Mr. Canter has been battling CFPB on Ms. Moroney’s behalf from the beginning, and he was ready to defend her in federal court in November 2019. He never got the chance. CFPB had the court dismiss the case as “moot,” but three hours later it announced that it would reissue a nearly identical CID and keep the investigation going without court oversight.

NCLA contends that CFPB acted beyond its constitutional authority when it targeted Ms. Maroney’s Law Firm with a Civil Investigative Demand, withdrew that CID on the cusp of her federal court hearing challenging it, and then promptly issued a new CID practically identical to the original one as soon as the case was dismissed as moot. The complaint asks the Court to redress this fundamental denial of Crystal Moroney’s right to due process.

Last December, The New Civil Liberties Alliance has filed a ​lawsuit​ in the U.S. District Court for the Southern District of New York challenging the funding mechanism for the Consumer Financial Protection Bureau (CFPB) as unconstitutional. Specifically, NCLA alleges that Congress unlawfully divested its legislative appropriations power when it gave CFPB the ability to draw funding directly from the Federal Reserve, without annual appropriations from Congress and without oversight from the appropriations committees of Congress.

The case also preserves the objection that ​Congress may not vest executive authority in CFPB, an independent agency led by a single director, while also shielding that agency’s director from Presidential oversight and removal.

Mark Chenoweth, NCLA Executive Director and General Counsel, believes that, “the case will afford an excellent opportunity to call into question the highly irregular—and almost certainly unconstitutional—way in which Congress has funded CFPB.”