WASHINGTON–State National Bank of Big Spring, Texas, has moved for summary judgment here against the Consumer Financial Protection Bureau, arguing the agency is “unconstitutional.”
The motion was filed in U.S. District Court for the District of Columbia here and names U.S. Secretary of the Treasury and former Chairman of the Financial Stability Oversight Council Jacob J. Lew as defendants. It is a continuation of a suit filed in 2013, and includes as co-plaintiffs the Competitive Enterprise Institute and the 60 Plus Association. The plaintiffs are arguing that all regulations that have been promulgated while Richard Cordray has been director are invalid, because the method of Cordray’s appointment to the position was illegal.
“The Consumer Financial Protection Bureau (“CFPB”) was designed to be—and operates as—a government unto itself,” the plaintiff’s motion reads. “It is vested with sweeping executive authority to make and enforce rules that affect virtually every sector of the U.S. economy. This authority is entrusted to a single individual, the Director, who serves a five-year term that is longer than the President’s. Yet the Director does not answer to the President, who is prohibited from removing him from office except for cause. Indeed, the Director stands above the President, as by statute the Director’s view of consumer financial protection law prevails over the President’s if the two disagree.
“Further, unlike the President, who is checked in the exercise of his executive authority by his dependence on congressional appropriations to fund the government that he runs, the CFPB is exempted from Congress’s power of the purse and accompanying congressional oversight,” the motion continues. “Indeed, the CFPB has been created as an entirely self-perpetuating entity, empowered to appropriate hundreds of millions of dollars annually from the Federal Reserve System for its own use, without approval or review from the legislative or executive branches. Nor did Congress stop at freeing the CFPB from external restraints; in the asserted interest of fostering energy and independence, Congress also eschewed the creation of any internal checks or balances within the CFPB, such as those that are afforded by a deliberative multi-member commission structure.
“The Constitution does not permit the creation of such an entity. Rather, to protect individual liberty, the Constitution mandates a separation of powers that imposes checks, balances, and accountability on the exercise of governmental authority.”
The plaintiff’s go on to add in their motion, “Whatever the merits of (Congress’) policy objective, the Constitution does not permit the amalgamation of such sweeping and unchecked authority in a single executive entity. Certain features of the CFPB viewed in isolation may or may not be constitutionally permissible, but the combination cannot be reconciled with the text or structure of the Constitution. Fidelity to the Constitution requires that the CFPB be invalidated.”
The bank initially filed its suit after encountering issues with the CFPB over its mortgage lending and wire transfer practices.
A copy of the motion can be found in CUToday.info’s The Vault here.