Pub. 10 2019 Issue 4

www.wvbankers.org 12 West Virginia Banker W hether you are new to banking compliance or you have been in the field for the past few years (or longer), there is one federal agency with which you are undoubtedly familiar: The Bureau of Consumer Financial Protection, or CFPB for short. This agency, created in the af- termath of the financial crisis of 2008, aims to keep businesses in check and consumers safe via a combination of regulation, education and enforcement. The CFPB has been controversial since its inception — its unique structure makes it either free to operate unburdened or accountable to no one, depending on who you ask. This has led to numerous legal challenges, one of which has emerged front and center. In mid-October, the U.S. Supreme Court decided to hear the case of Seila Law LLC v. CONSUMER PROTECTION BUREAU. This case serves as a direct challenge to the CFPB’s legality. At the heart of the matter is the amount of power that was given to the director of the agency when it was created: the suing company, a law firm based in California, is claiming that so much power is unconstitutional because it is not adequately checked by the three constitutional branches of government. A decision that strikes down the CFPB could have earth- shaking consequences for the federal regulatory compliance community. To begin with, many (if not most) of the federal regulations affecting consumers have been moved from the other regulatory agencies to under the CFPB’s purview — if the agency is found unconstitutional, the legality of those regulations may be called into question. Secondly, for larger institutions that are subject to direct enforcement from the CFPB, the ruling could result in a free reign period where no direct examinations or enforcement actions would take place, which could create massive confusion and result in unfair con- sequences once the dust settles. Finally, the CFPB’s downfall could prompt individual states to issue legal challenges or pass more robust consumer protection laws to fill the void, which could give rise to a messy web of laws, regulations and legal rulings. Despite the severity of these implications, it’s important to not be hasty. To begin with, the CFPB already has survived numerous court challenges. Moreover, there doesn’t appear to be enough political support in both houses of Congress to back a court decision abolishing the agency. Still, the Su- preme Court does currently have a 5-4 conservative majori- ty, and the CFPB, which is commonly viewed as having liber- al intentions, is unlike any other federal agency that has ever existed, so it’s anyone’s guess as to what might happen. As we see it, the most likely outcome is that certain aspects of the director’s power may be found unconstitutional, but the agency itself will continue to survive regardless — the Supreme Court seems especially interested in whether the agency would be able to remain if found to be unconstitu- tional, and it has asked both sides to submit responses to that very question. A decision on Seila Law is expected back near the end of June 2020. In the meantime, be sure to keep an eye on our daily Newsletter updates, articles, tools and other notifications, and if you have any questions about this case or other constitutional challenges to the CFPB, remember that our hotline staff (hotline@compliancealliance.com) is available to help!  The Bell Tolls for Thee, CFPB? By Compliance Alliance