Court Unexpectedly Revives Constitutional Challenge to CFPB

The American Banker reports:

Two years after a legal challenge to the Consumer Financial Protection Bureau's constitutionality was dismissed by a federal court, the case is unexpectedly back from the dead.

The D.C. Circuit court reopened Texas-based State National Bank of Big Spring's case against the CFPB, concluding it has legal standing to sue despite the fact that it is not directly supervised by the agency.

The court said the $340.5 million-asset bank's claims that the CFPB should be run by a commission rather than a single director and that CFPB Director Richard Cordray was improperly appointed during a Congressional recess could move forward. It dismissed other claims, including those that questioned the legal power of the Financial Stability Oversight Council and new powers granted by the Dodd-Frank Act to allow regulators to unwind large, failing institutions.

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