A Texas community bank is leading a lawsuit against the Consumer Financial Protection Bureau.

The State National Bank of Big Spring filed a lawsuit Thursday in the U.S. District Court for the District of Columbia. The suit challenges certain provisions in the Dodd-Frank Act as unconstitutional, with a focus on the creation of the CFPB. The Competitive Enterprise Institute and the 60 Plus Association also joined the case. The parties complained in a press release Thursday that there are "no checks and balances" in Dodd-Frank, while taking issue with the "unrestrained power" that the government gives to the CFPB.

"No other federal agency or commission operates in such a way that one person can essentially determine who gets a home loan, who can get a credit card and who can get a loan for college," Jim Purcell, State National Bank's chief executive, said in the release. "Dodd-Frank effectively gives unlimited regulatory power to this so-called Consumer Financial Protection Board . . . with a director who is not accountable to Congress, the President or the Courts. That is simply unconstitutional."

The $294 million-asset State National Bank is largely exempt from many new regulations based on its size. It would become the first known community bank to file a lawsuit against the CFPB, rather than taking offence with one particular regulation. It's unclear whether more community bankers will join the suit.

Some of the group's biggest concerns involve the CFPB's structure, which includes one unelected director who largely administers the roughly $400 million budget and has "unaccountable power."

"As a whole, Dodd-Frank aggregates the power of all three branches of government in one unelected, unsupervised and unaccountable bureaucrat," said C. Boyden Gray of Boyden Gray & Associates, who is representing the plaintiffs, in the release. Gray once was a White House counsel to former President George W. Bush.

It was widely assumed that lawsuits would be filed against the CFPB immediately after Richard Cordray was appointed the director in January. But so far, very few lawsuits have been filed, nor have they been as broad as State National Banks's allegations. Earlier this month, conservative watchdog group, Judicial Watch Inc., filed a Freedom of Information Act lawsuit against the CFPB related to information it repeatedly requested about Cordray's appointment.

The plaintiffs in the new lawsuit noted that the CFPB is overseen by the Dodd-Frank Financial Stability Oversight Council but they argue that its review is nearly "nonexistent." The FSOC "can overturn a CFPB regulation under only limited circumstances, and even then only if seven of the 10 FSOC members, including the CFPB Director himself, vote to overturn the CFPB's rule," the plaintiffs stated. "Most importantly, the Council has no power to oversee the CFPB's enforcement activities, which is the CFPB's preferred method of lawmaking."

 

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