I’ve been expecting a lawsuit somewhere down the road related to the President’s recess appointments from late last year. At some point, either the Consumer Financial Protection Bureau or the National Labor Relations Board were bound to issue a ruling that the subjects affected didn’t like, and they would resort to claiming that the recess appointments were unconstitutional, and therefore the rulings handed down inapplicable and illegitimate. It took a bit longer than I thought, but we finally saw that today.
A small Texas bank, together with two conservative advocacy groups, have filed suit against the Consumer Financial Protection Bureau, claiming that its powers and Obama’s recess appointment of its director are unconstitutional.
The State National Bank of Big Spring, Tex., the Competitive Enterprise Institute and the 60 Plus Association, a conservative advocacy group for seniors, claim that Dodd-Frank effectively gives “unbounded power to the CFPB,” resulting in “unprecedented violations of ‘the basic concept of separation of powers’ ” laid out in the Constitution.
The lawsuit also alleges that President Obama’s recess appointment of CFPB Director Richard Cordray was unconstitutional because it did not happen during an official Senate recess. Finally, it claims that the new Financial Stability Oversight Council is also unconstitutional for having “sweeping power and effectively unbridled discretion” to determine which banks are “too big to fail” and thus subject to greater oversight.
This suit really overreaches, in my estimation, from the narrow point that the recess appointment is unconstitutional, to a broader view that consumer financial protection regulation in general is unconstitutional. There is no grounding for a claim that a bureau with a single director that gets its funding from the Federal Reserve’s budget violates the separation of powers; that’s a fairly crazy claim. Indeed, the CFPB is still subject to all kinds of oversight, from judicial review to comptroller general audits. And Congress has had no problem finding Richard Cordray and other CFPB officials and hauling them before hearings.
The whole lawsuit is here. The recess appointment piece is the only thing I can see that could get a legitimate hearing. I happen to believe that the Administration was on solid footing to blow up the pro forma session fiction. But they could be a bit more forthcoming with their reasoning. The White House recently sent out a Bush-era OLC opinion on recess appointments, subject to a FOIA request, with most of it redacted. They can do better than that, and a court would presumably make them.





5 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
As I read the article in this morning’s WaPo, I got the impression that the concern was that the CFPB was beyond the operational control and financing of both the executive and the legislative branches and in effect created a new branch of government. Don’t really know if that is true, but given the current make-up of the courts, if that is anywhere near true it could effectively undercut the legislation that established the Board.
SNB Big Spring has standing because it’s (1) not “Too Big To Fail”? Or (2) because it believes it is “Too Big To Fail”?
Solution to (1), Cannot afford the bribes? How sad. Make lots of acquisitions.
Solution to (2), this is a problem?
Hey D Day I read u every day now ur on mu favorite show. Keep up the good work! TYt army too strong
Hey D Day. I finally saw you just now on The Young Turks with Cenk Uygur, and you’re not ten-feet tall as I had imagined. In fact, you look like you might be a mortal, but I’m not yet convinced. Anyway, he had you on right before Darryl Hannah. Ain’t that something?
after Citizens United can you blame the wingnuts for launching just about any kind of lawsuit against everything they disagree with. Our glorious Gang of Five of the scotus are political operatives, that’s why there is and will be a lawsuit challenging everything conservatives disagree with, and if the Chamber of Commerce endorses the lawsuit, they’re pretty much guaranteed a win with the Five Nutcases.
special kudos go out Judiciary Chairman Biden for suppressing evidence and allowing Clarence Thomas to make it through committee. And also Patrick Leahy, ranking member, who led the cheerleading for John Roberts. Well done, guys, you kind of killed our democracy !