Appeals Court Rules CFPB’s Constitutionality Can Be Challenged

Appeals Court Rules CFPB’s Constitutionality Can Be Challenged

July 27, 2015         Written By John H. Oldshue

On Friday, a federal appeals court dealt the Consumer Financial Protection Bureau a potential setback when it ruled that a small Texas bank could proceed with a lawsuit against the constitutionality of the CFPB structure.

In June 2012, the State National Bank of Big Spring brought suit against the constitutionality of the CFPB, claiming that independent government agencies cannot be run by a single director, but instead must be headed by multiple members. The trial court threw out that lawsuit in 2013, but the U.S. Court of Appeals for the District of Columbia ruled unanimously that the bank could proceed with its lawsuit.

In its 3-0 ruling, the appeals court said the small west Texas bank can go forth with its legal challenge because the bank is subject to the CFPB’s regulations and oversight.

“There is no doubt that the bank is regulated by the Bureau,” the Court ruled. “The bank therefore has standing to challenge the constitutionality of the Bureau.”

The appeals court sent the case back to the lower court to be heard.

The Consumer Financial Protection Bureau is run by a single director, Richard Cordray, who was originally appointed in January 2012 by President Obama. That appointment was challenged by Republicans since it was made during a Senate recess. Cordray was finally confirmed by the Senate 18 months later on July 16, 2013 by a 66-34 vote.

The information contained within this article was accurate as of July 27, 2015. For up-to-date
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About John H. Oldshue

John Oldshue is the creator of He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for
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