CEI’s Constitutional Challenge to Consumer Financial Protection Bureau Finally Reaches the Merits

Friday, the Competitive Enterprise Institute (CEI) filed its opening brief in its lawsuit State National Bank of Big Spring, Texas et al. v. Lew et al challenging the constitutionality of the existence of the Consumer Financial Protection Bureau (CFPB).  The suit, filed in the U.S. District Court for the District of Columbia, also challenges CFPB rules that were issued by the agency’s director, Richard Cordray, while he held office under an illegal recess appointment.

As plaintiffs, the State National Bank of Big Spring, Texas,, the 60 Plus Association and CEI argue Dodd-Frank gives the CFPB unrestrained power over the daily lives of the American people. Because the agency draws its funding from the Federal Reserve rather than through congressional appropriations, it is unaccountable to Congress.  And because its director cannot be fired at will by the President, it is unaccountable to the President as well.

“Dodd-Frank gave unelected bureaucrats Czar-like power over the financial system and has allowed the CFPB to inflict damage on huge segments of our economy,” said CEI General Counsel Sam Kazman. “Its powers are entirely free-roaming, violate the Constitution’s separation of powers, and are unprecedented in American history.”

Below is a statement by Jim Purcell, Chairman of the Board and CEO of the State National Bank of Big Spring, Texas, which is the lead plaintiff in the case:

“No other federal agency has this much power over who can get a home mortgage or a credit card or a loan for college. As a small community bank in West Texas, we’ve always been burdened by regulations coming out of Washington.  But the Consumer Financial Protection Bureau is more threatening than anything we've run into before, because it is so unrestrained by the Constitution’s traditional checks and balances."

The lead attorneys on the case are Gregory Jacob of O’Melveny & Myers LLP, and C. Boyden Gray and Adam White of Boyden Gray & Associates.

Note: On July 24, 2015, the D.C. Circuit Court affirmed the plaintiffs’ standing to proceed with this suit against the CFPB and of the recess appointment of its director.

>> Read the brief here. Learn more about the case here