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Group files challenge of Consumer Financial Protection Bureau
By John O’Brien 

WASHINGTON (Legal Newsline) - The Competitive Enterprise Institute is challenging the constitutionality of the Consumer Financial Protection Bureau, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The CFPB, headed by former Ohio Attorney General Richard Cordray, lacks adequate checks and balances and violates the Constitution’s separation of powers, the organization says. 

“Its director is like a czar,” CEI attorney Hans Bader said. “He is not accountable to anyone and can’t be fired even if voters elect a president with different ideas about how to protect consumers.” 

The State National Bank of Big Spring, Texas, and the 60 Plus Association are also plaintiffs in the lawsuit, which was filed Thursday in the District of Columbia federal court. 

It also challenges the appointment of Cordray, who was never approved by the full Senate. President Barack Obama made Cordray a recess appointment in January, but Republicans have argued the Senate was still in session and his appointment - along with appointments made to the National Labor Relations Board - is unlawful. 

Republicans say they were attending pro forma sessions at the time. CEI says Congress passed a major piece of economic policy legislation during that period. 

Bader says a 1926 U.S. Supreme Court decision allows a president to fire department heads at will and the CFPB, unlike independent commissions, is covered by the rule because it is a single-leader agency not subject to collegial oversight. 

“Unlike the Chairman of an independent agency like the SEC, who can be outvoted by fellow commissioners if he oversteps his authority, the CFPB’s director is accountable to no one,” Bader said. 

“He is not accountable to the democratically-elected President, unlike cabinet secretaries, who can be removed at will by the President. If the CFPB’s sole director can be given immunity from removal, so, too, could cabinet secretaries, who could be given life tenure, enabling them to thwart the very changes that a newly-elected President was elected to carry out.” 

CEI also says judicial review of the bureau’s actions is limited because the Dodd-Frank law requires courts to give extra deference to the bureau’s legal interpretations. 

Other gripes with the bureau include funding that comes from the Federal Reserve and not Congress, resulting in approximately $400 million that Congress can’t regulate; and unelected bureaucrats wielding “unrestrained power” over the lives of U.S. citizens without public accountability. 

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