D.C. Circuit Allows Constitutional Challenge To CFPB

In a groundbreaking decision on July 24, the D.C. Circuit Court of Appeals held that a Texas bank could pursue its constitutional challenge against the Consumer Financial Protection Bureau and its Director.  This decision was notable in allowing a regulated entity to maintain a so-called "pre-enforcement" lawsuit against a federal agency which contested the legality of the agency itself. 

The bank – State National Bank of Big Spring, Texas – joined a group of states and private entities in attacking various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"),  12 U.S.C. §§ 5301 et seq.  Importantly, the bank argued that the CFPB was unconstitutional in design and wielded too much legislative power.  The bank also challenged the recess appointment of Richard Cordray, the Bureau's Director, in early 2012.  On the trial level, the federal district court ruled that the bank and its co-plaintiffs did not have standing