Resources for the COVID-19 Response

In the wake of the outbreak of COVID-19, the Federal Government passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a massive stimulus package, along with three other stimulus bills. Because of the speed at which these laws were passed, many of the details surrounding implementation require additional guidance from agencies. Here are some resources for those with questions about the government’s response to COVID-19:

  • Consumers: The National Consumer Law Center’s digital library has put together one of the most comprehensive guides for how the CARES Act affects consumers. The guide covers federal mortgages, eviction freezes, consumer credit, debt collection, and bankruptcy, among other things. The guide also provides links to state resources, where possible, when the questions are those generally left to state governments, such as foreclosures and utility bills.
  • Scam Avoidance: As quick as stimulus checks are distributed to people around the country, scammers are finding ways to trick people into giving their checks away. The U.S. Treasury has a page dedicated to reporting IRS-related scams. Likewise, the Federal Trade Commission has posted a host of information on what scams to watch out for and how to avoid them.
  • Small Businesses: On April 16, 2020, the Small Business Administration’s coronavirus response, the Paycheck Protection Program (PPP), ran out of money that was intended to help small businesses as part of the CARES Act. As a result, the SBA had to suspend any applications for relief under the Act. Part of the reason the funds went so quickly, it appears, is because many of the funds intended for small businesses went to large, publicly traded companies. Although in light of the negative public response, some entities have since returned money to the PPP. Congress passed a new round of $484 billion in funding on April 24, 2020, including $310 billion in new funding for the PPP. It does not appear that the rules for eligibility under the program have changed, but the Treasury and members of both major parties in Congress have warned that if large companies who do not really need the money continue to certify that they do, they will be subject to Congressional investigation. Treasury Secretary Steven Mnuchin stated that any loan over $2 million will get a “full review” from Treasury. The SBA maintains (and updates) an FAQ that provides information on the agency’s implementation of the CARES Act, as well as qualification and certification requirements.
  • Oversight: In addition to the additional funding passed on April 24, 2020, the U.S. House of Representatives voted to create a new committee to oversee the government’s use of the bailout funds. The committee, chaired by House Majority Whip Jim Clyburn (D-S.C.), will have subpoena power and will focus on how the Trump Administration uses the bailout funds. Republicans in the House opposed the creation of the committee, contending that it is too political and redundant of other oversight efforts included as part of the response to COVID-19.

Supreme Court to Decide the Constitutionality of the CFPB

On March 3, 2020, the Supreme Court will hear Seila Law, LLC v. Consumer Financial Protection Bureau, to determine whether the structure of the CFPB is constitutional. How the Court answers the question could have far-reaching impact, not only in determining how the CFPB operates in the future, but also in potentially invalidating past CFPB actions.

Created in 2011 in the wake of the financial collapse, and followed in detail by Citizen Works then, the CFPB exists to enforce a variety of federal consumer-protection laws and to protect consumers from the volatility of the financial marketplace that left many in dire circumstances in 2008. Prior to the creation of the CFPB, consumer-protection laws enforcement was spread throughout different government agencies—leading to a confusing patchwork of enforcement, or nonenforcement. After the collapse, the Obama administration pushed the creation of the bureau—first proposed as an independent agency by then-Professor Elizabeth Warren.

When Congress created the CFPB—as part of the Dodd–Frank Act—it wanted the agency to be powerful, free of industry influence, and safe from the political squabbles of Congress. To that end, the CFPB is unlike many other executive agencies for two reasons. First, it receives its funding directly from the Federal Reserve, guaranteeing that Congress cannot hamstring the Bureau by withholding funding. Second, the CFPB has a single director, appointed by the President with the advice and consent of the Senate, who serves a five-year term and is removable only for “inefficiency, neglect of duty, or malfeasance in office” (also known as “for cause” removal). 12 U.S.C. § 5491(c)(3).

The second of those features is at the heart of the challenge in Seila v. CFPB. Seila Law describes itself as a consumer-protection firm. When the CFPB began investigating the firm, for allegedly violating consumer-protection laws, the Bureau issued a civil investigative demand, asking for information about the firm. Seila refused to provide the information, contending that the agency was unconstitutional because it was structured with a single director who could be removed only for cause. Seila made that argument to the district court and the Ninth Circuit, and both courts rejected it. When Seila asked the Supreme Court to weigh in, the U.S. Solicitor General’s Office, in a rare move, agreed that the CFPB is unconstitutional. The Court agreed to hear the matter.

At the heart of the challenge is a separation of powers question. As a general matter, the President—who has the constitutional responsibility to see that the laws are faithfully executed—can choose who runs the various executive agencies. That way, the President can make sure that the agencies and the White House share the same priorities. There are a few exceptions though. Some agencies, such as the Federal Trade Commission, have a multi-member board and the Supreme Court has held that it is constitutional that board members are removable only for cause. See Humprey’s Executor v. United States. Similarly, the Supreme Court has upheld the constitutionality of allowing independent investigators to be removed only for cause. See Morrison v. Olson.

The Supreme Court will consider whether the CFPB’s composition is constitutional in its similarity to those structures that have already been upheld, or whether the CFPB goes further than the multi-member boards and independent investigators and must be deemed unconstitutional. The Court’s decision will likely be a controversial and important opinion for consumer protection.