The attorneys general of 17 states have filed a motion to intervene in the case between PHH Corp. and the Consumer Financial Protection Bureau over the bureau's constitutionality.
The U.S. Court of Appeals for the District of Columbia Circuit ruled in October 2016 that the CFPB is "unconstitutionally structured" because it is led by a single director who can only be removed for cause. The CFPB filed an appeal to the decision, which is still pending in court.
"The current ruling, if permitted to stand, will undermine the power of the State Attorneys General to effectively protect consumers against abuse in the consumer finance industry," the attorneys general wrote in a motion to the court.
The attorneys general said they decided to file the motion after indications from President Donald Trump's administration that it intends to curtail the authority of the CFPB.
"A significant probability exists that the pending petition for rehearing will be withdrawn, or the case otherwise rendered moot, in a way that directly prejudices the interests of the State Attorneys General and the citizens of the States that they represent," the motion said.
An immediate termination of the director at will can compromise the independence of the agency and derail enforcement actions, the attorneys general wrote in the motion.
Trump is reportedly thinking about replacing current director Richard Cordray with Randy Neugebauer, a Texas Republican who introduced a bill to replace the CFPB with a five-member Financial Product Safety Commission in March 2015.
The motion was filed by attorneys general of Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia.