Lawsuit Brought by Consumer Advocates Against CFPB and Former Director Kathy Kraninger Also Yields Release of Taskforce Records

Boston — Late Monday, the Consumer Financial Protection Bureau (CFPB) acknowledged that its Taskforce on Federal Consumer Financial Law, convened by former CFPB Director Kathy Kraninger, was “created and operated in violation of FACA [the Federal Advisory Committee Act].” The Taskforce, while ostensibly established to “modernize” consumer finance laws and regulations, excluded consumer protection experts and ran roughshod over FACA requirements, which are designed to ensure advisory committees serve the public interest. The Taskforce lacked a single proponent of robust consumer protections and was stacked with representatives of the financial services industry, including: Todd Zywicki; Thomas Durkin; Howard Beales III; William Macleod and Linda Jean Noonan. 

The Taskforce issued its final report in January, which parrots the financial industry’s agenda to resist consumer financial protections. The CFPB also acknowledged this report was produced in violation of FACA, and that it “should not be relied upon as a product of a federal advisory committee that was established or operated in compliance with FACA.”

Democracy Forward and David A. Nicholas, Of Counsel to Wolf Popper LLP, filed suit against the CFPB and former Director Kathy Kraninger on behalf of the National Association of Consumer Advocates, U.S. Public Interest Research Group (PIRG), and consumer law expert Professor Kathleen Engel in June of 2020. On Monday, the parties settled the case.

In response to the CFPB’s announcement, Democracy Forward, the National Association of Consumer Advocates, U.S. Public Interest Research Group, and consumer law expert Professor Kathleen Engel issued the following statement:

“This is a pivotal moment in the fight to uphold federal transparency law, protect consumers’ rights, and maintain accountability within the financial services industry. The Taskforce on Federal Consumer Financial Law was one of the most significant efforts by Trump appointees to outsource policymaking to private interests, while excluding other voices. We filed suit against the CFPB and Director Kathy Kraninger to hold them accountable for violating the Federal Advisory Committee Act. The agency failed to explain why the Taskforce was necessary, stacked it with only industry representatives, withheld its records, and kept the public out of its meetings.

Each day, the thousands of people working within federal and state governments craft careful regulations that take into account the need to protect consumers without unduly restricting their options or hampering the financial and related industries. They use thoughtful research and analysis, not secretive deliberations and industry talking points, to perform their work. The CFPB’s acknowledgment of the illegality of the Taskforce sends an important message that the agency is putting the rights of the consumer first. We commend the CFPB for taking action on behalf of consumers and look forward to their continued efforts to protect American families.”

A federal court denied the Trump administration’s attempt to dismiss the lawsuit in February 2021. In August, the plaintiffs filed a motion for summary judgment urging the court to order all necessary relief to remedy the harms caused by the Taskforce and uphold the law. Learn more about the case here.

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Democracy Forward is a nonprofit legal organization founded in 2017 to litigate challenges to unlawful executive branch action on behalf of organizations, individuals, and municipalities. The organization has taken 650 legal actions and reversed dozens of harmful policies. Democracy Forward is expanding its work, building on its success to confront unlawful threats to democracy and social progress.

The National Association of Consumer Advocates (NACA) is a nonprofit association of private and public sector attorneys, legal services attorneys, law professors, and law students whose primary focus involves the protection and representation of consumers. NACA is actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means. 

U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. U.S. PIRG is part of The Public Interest Network, which operates and supports organizations committed to a shared vision of a better world and a strategic approach to getting things done.

Kathleen Engel is a prominent scholar of consumer law and finance. She has written extensively on the law and economics of mortgage markets, as well as the subprime crisis, and she co-authored a prize-winning book on the 2008 financial crisis. Engel is a Research Professor of Law at Suffolk University and has held a number of public service positions, including on the Federal Reserve Board’s Consumer Advisory Council, the CFPB’s Consumer Advisory Board, and Vice-Chair of the Board of Consumer Reports. Professor Engel’s views and opinions expressed in this litigation are her own and do not necessarily reflect the views of Consumer Reports.

Press Contacts

Emily Singer
(973) 865-0063
esinger@democracyforward.org  

Ira Rheingold
(202) 452-1989, x101
ira@consumeradvocates.org 

Ed Mierzwinski
(571) 228-6135
edm@pirg.org 

Kathleen Engel
(617) 994-6831
kengel@suffolk.edu