Community Bank fires first volley at Consumer Protection Financial Bureau

State National Bank of Big Spring has challenged the constitutionality of the “formation and operation” of the Consumer Financial Protection Bureau (“CFPB”), Financial Stability Oversight Council (“FSOC”), and the appointment of CFPB director Richard Cordray.

The local Texas bank, joined by interest groups The 60 Plus Association, Inc. and The Competitive Enterprise Institute, alleges the CFPB has “effectively unbounded power” and is “insulat[ed]…against meaningful checks” by all branches of government – a violation of the separation of powers.  The lawsuit also claims the FSOC is similarly insulated from checks and has too much discretion in deciding which financial companies will receive federal backing. Finally, the lawsuit states that because the President appointed Richard Cordray without “the Senate’s advice and consent while the Senate was in session” the appointment is unconstitutional.

The bank also claims that the Dodd Frank provision that authorizes the CFPB to create rules prohibiting “unfair, deceptive or abusive acts or practices” provides no meaningful definition of what constitutes an “unfair” practice, creating unnecessary risks for lenders left unsure of their boundaries.

Full content: Complaint (PDF)

Related content: Preserving Competition After the Banking Meltdown

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