Bank has standing to challenge constitutionality of federal consumer agency, appeals court says
A federal appeals court has ruled that a bank has standing to challenge the constitutionality of the Consumer Financial Protection Bureau.
The U.S. Court of Appeals for the District of Columbia Circuit ruled on Friday in the suit by the State National Bank of Big Spring, report the National Law Journal (sub. req.) and the Wall Street Journal (sub. req.). How Appealing links to the opinion (PDF) and additional coverage.
The Texas-based bank has standing because it is regulated by the agency, the appeals court said.
The bank argues the CFPB, created by the Dodd-Frank Act, is unconstitutional because independent agencies must be headed by multiple members rather than a single person. The bank also claims Congress’ broad delegation of authority to the CFPB violates the non-delegation doctrine.
The bank also challenges President Obama’s recess appointment of the CFPB director Richard Cordray, who was confirmed after serving for 18 months under recess appointment.
The bank, however, lacks standing to challenge the Financial Stability Oversight Council, which monitors the stability of the financial system and can designate some banks as too big to fail, the court said. The court also found that states lack standing to challenge government authority to liquidate failing financial institutions. The council and the liquidation authority were both authorized by Dodd-Frank.
