Supreme Court denies bank’s petition for review of CFPB constitutionality

The U.S. Supreme Court on Monday declined to review a Texas bank’s claim that the Consumer Financial Protection Bureau (CFPB) is unconstitutional.

Supreme Court Justice Brett Kavanaugh, who as a D.C. Circuit court judge opined that the CFPB is unconstitutional, did not participate in Monday’s decision.

State National Bank of Big Spring, Texas, and two other plaintiffs had been suing to have the bureau declared unconstitutional over its single-director leadership structure and funding mechanism (which is not through appropriations). The complaint was dismissed by the U.S. District Court for the District of Columbia over lack of standing, but on appeal the D.C. Circuit court found the bank did have standing and remanded it to the district court. The court dismissed the claim after the bureau’s constitutionality was upheld in another case (PHH Corp. vs. Consumer Financial Protection Bureau).

The Department of Justice, in a brief filed in December, said the question of the CFPB’s constitutionality warrants Supreme Court review. However, it said this case “would be a poor vehicle for considering the constitutionality of the Bureau’s structure because it is unlikely that the question would be considered by the full Court in this case and, even if it were, there is a substantial jurisdictional question that could prevent the Court from reaching the merits of this dispute.”

Regarding jurisdiction in the State National Bank complaint, the DoJ noted that two of the petitioners – the 60 Plus Association, Inc., and the Competitive Enterprise Institute – are not banks and are not regulated by the CFPB. It also noted that State National Bank, with less than $10 billion in assets, is supervised not by CFPB but by the Office of the Comptroller of the Currency with respect to consumer financial law.

The DoJ said one or more other cases still pending – for example, CFPB v. RD Legal Funding, LLC, No. 18-2743 (2d Cir. filed Sept. 17, 2018), CFPB v. All American Cash Checking, Inc., No. 18-60302 (5th Cir. filed Apr. 24, 2018), and CFPB v. Seila Law, LLC, No. 17-56324 (9th Cir. filed Sept 1, 2017) – “may not present the same obstacles that could impede the full Court from considering the merits of this important issue.”

SCOTUS Jan. 14 orders list

DoJ brief from December

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