“One bank's challenge to the CFPB will move forward after the D.C. Circuit Court of Appeals reversed dismissal of the lawsuit,” law firm Manatt, Phelps & Phillips wrote on the legal website lexology.com. “In its suit, Texas-based State National Bank of Big Spring argues that independent agencies must be led by multiple members (such as the five Commissioners of the Federal Trade Commission) and not a single person, as is the case with CFPB director Richard Cordray.”
And while the outcome is yet to be determined, mortgage originators are already arguing in favor of the suit’s objectives.
“The CFPB has a lot of power and it shouldn’t be ruled by just one person,” Steve Kirmish, president of Residential Mortgage Corporation told Mortgage Professional America. “I’m not so sure how far the lawsuit will go, though.”
A federal district court originally tossed the suit but the D.C. court reinstated the case on the grounds that Big Spring bank offer products that are subject to CFPB regulation.
“The bank also contested the constitutionality of President Barack Obama's appointment of director Richard Cordray,” the law firm writes. “The Senate did not act on the President's nomination of Cordray for six months, so President Obama used his recess appointment power to appoint Cordray during a three-day intra-session Senate recess.”
Eleven state governors have also joined the suit.
Originators have long lamented some of the CFPB’s decisions, and one bank is taking the regulator to court, alleging it is unconstitutional.