A number of Republican state attorneys general have refused to sign a memorandum of understanding with the Consumer Financial Protection Bureau, extending the debate over the controversial agency.
In March, Richard Cordray, the director of the CFPB, asked all 50 states to sign a cooperation agreement designed to protect confidential information shared between the consumer watchdog and states. Only 12 states to-date have signed the agreement, American Banker reports.
Scott Pruitt, Oklahoma’s attorney general, said that he refuses to sign the agreement due to legal concerns regarding the 2010 Dodd-Frank Act, the financial reform law that created the CFPB.
“There are misgivings I have about the authority and scope and power of the CFPB and the power granted to the director,” Pruitt said, according to American Banker. “Frankly, until some of those issues are fleshed out, it is very premature for a state to enter into an MoU.”
The CFPB has made an effort to cooperate with state attorneys general since it was established by Elizabeth Warren, a Harvard professor and Democratic Senate hopeful. Warren said that state law officials were “natural partners” for the agency because of their commitment to consumer protection.
Republicans opposed the creation of the federal consumer watchdog agency, and Senate Republicans refused to confirm any nominations to the position of CFPB director. President Obama used the power of recess appointment to install Cordray to the position of director in January, American Banker reports.
At least two Republican state attorneys general, including Pruitt and Alan Wilson, South Carolina’s attorney general, plan to challenge the constitutionality of Dodd-Frank and the powers granted to the CFPB and its director.
“We’re going to challenge that law,” Wilson said, according to American Banker. “We’re going to take the battle back to Washington, D.C., because community banks on Main Street shouldn’t be choked to death so that big banks on Wall Street can take our money.”
Pruitt and Wilson signed a memo from the Republican State Leadership Committee that criticizes the Obama administration’s “disdain for states, federal laws it finds inconvenient, the Constitution and the courts.” The memo further includes Obama’s installment of Cordray as another objection.
Hawaii, Iowa, Mississippi, Montana, Nevada, New Hampshire, New Mexico, New York, North Carolina and Vermont have all signed the memorandum, while the District of Columbia, North Dakota and Wyoming have since signed MoUs with the CFPB.
“We are pleased that we have a dozen agreements and additional agreements in the works,” Moira Vahey, a CFPB spokeswoman, said, American Banker reports. “However, this is a state-by-state process and will take time.”