More reasons the CFPB may be unconstitutional

John Lande Iowa Banking Law Dickinson Law Des Moines Iowa

Posted on 03/29/2016 at 12:00 AM by John Lande

This blog has been covering recent litigation challenging the constitutionality of the CFPB. Previously, National Bank of Big Spring (“Bank”) filed its brief explaining why the court should rule the CFPB and some of its rules are unconstitutional. The CFPB recently filed its response to the Bank’s brief. Now, the Bank has filed its reply to the CFPB.

The Bank reiterates its view that the CFPB is an “unprecedented amalgam of sweeping executive power devoid of structural or constitutional restraint, answerable neither to the President nor to Congress.” The Bank recognizes that the CFPB was able to identify precedent that supports the various aspects of the CFPB’s authority that the Bank challenges. The Bank asserts that the CFPB takes a “piecemeal approach” to defending each aspect of the CFPB’s authority. This does not, according to the Bank, do anything to validate what the Bank argues is the truly novel amalgamation of powers that the CFPB enjoys. According to the Bank, it is the combination of powers that is unprecedented and unconstitutional.

The Bank also argues that the CFPB essentially agrees that regulations promulgated while Mr. Cordray was a recess appointee are illegal. The arguments focus on whether or not the Bank has the ability to challenge these regulations and whether the CFPB has the authority to ratify them after Mr. Cordray’s confirmation. The Bank argues that it has been harmed by the CFPB’s allegedly illegal regulations because the Bank has to comply with those regulations. The Bank also claims that the CFPB’s four-sentence notice ratifying regulations was legally insufficient to validate regulations.

The Bank’s reply does not cover substantially new ground, but instead sharpens the issues for the court. Now that the case is briefed the parties will likely have oral arguments. After arguments the case will be submitted and a ruling will likely take several months. In the meantime, a cloud will continue to hang over the CFPB’s actions.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

Categories: John Lande, Banking Law


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