Given court decisions in prior years that limit Michigan’s ability to enforce consumer protection laws, the state is reliant on the Consumer Financial Protection Bureau (CFPB) for regulatory enforcement. This would leave Michigan consumers vulnerable if the agency is severely scaled back or closed altogether.
This was the warning issued by Michigan Attorney General Dana Nessel at a press conference on Monday in Lansing, according to reporting at state-based news outlet Michigan Advance. Notably, Nessel was joined at the event by Rohit Chopra, the director of the CFPB during the Biden administration, who was fired by President Donald Trump in early February.
Two separate court rulings in the state — in 1999 and 2007, respectively — created exemptions in the Michigan Consumer Protection Act (MCPA). The rulings say that if deceptive conduct takes place within a regulated industry, it cannot be punished under the MCPA.
This has served to make Michigan quite reliant on the CFPB’s enforcement authority on behalf of its residents, Nessel said on Monday.
“Unfortunately, my office can now no longer rely upon this once dependable and powerful partner to protect Michigan consumers,” Nessel said, according to the report. “Their decision to strangle the CFPB has a particularly pernicious impact for Michigan consumers, who don’t have the same state-level consumer protections that their neighbor states do.”
Nessel was one of nearly two dozen state AGs to file amicus briefs in court to warn of the consequences of shuttering the agency. Shortly before he was dismissed from his role as director, Chopra’s CFPB released a road map designed to illustrate how states can fill a potential void in consumer protections should the CFPB’s role be reduced.
But with Michigan in a unique position that negatively impacts its ability to offer such protections, Chopra turned to the event that brought the CFPB into existence — the 2008 collapse of the U.S. banking system. He warned of the potential consequences of diminishing or dismantling the agency, which he said could create conditions for another such crisis in the future.
“Defunding this law enforcement does nothing to protect citizens, and only creates the conditions for another financial crisis,” Chopra said, according to the report. “Federal law enforcement helps get money back for everybody. I don’t know if it’s efficient for there to be 50 different lawsuits against those firms or 50 different investigations.”
This echoes some of what Chopra said in a recent appearance on CNBC. He added this week that the actions taken so far by the Trump administration have served to spark state regulators into action.
“Everyone is noticing that if federal law enforcement essentially rolls over and plays dead, the states are going to have to flex their muscles to make sure that their own neighborhoods, cities and towns are not harmed,” Chopra said.
State Rep. Kelly Breen (D) said at the same event that Democrats in the Michigan Legislature will move to restore some powers to the attorney general under the MCPA. Breen noted that a case was currently in front of the state Supreme Court to “overturn the previous rulings that limited the law,” the Michigan Advance reported.
The White House has insisted that its intent is not to close the CFPB but to streamline its operations and refocus its mission to its statutory responsibilities. They cite the president’s nomination of Jonathan McKernan as the bureau’s next full-time director.
McKernan sat for a Senate confirmation hearing last month, was forwarded to the full body. A confirmation vote on his nomination has not yet been scheduled.
