Supreme Court Declines to Hear Lawsuit Challenging CFPB Constitutionality

The Supreme Court today declined to hear a lawsuit challenging the constitutionality of the Consumer Financial Protection Bureau (CFPB). The State National Bank of Big Spring, Texas, the Competitive Enterprise Institute (CEI), and the 60 Plus Association were petitioners in the case, State National Bank of Big Spring v. Mnuchin.

“We are disappointed by the Supreme Court’s decision to turn down the case,” said Sam Kazman, CEI general counsel. “The case raised constitutional issues of major importance regarding the Consumer Financial Protection Bureau, an agency that wields massive power over the economic activities of the public and sets a dangerous precedent for unaccountable federal bureaucracy. But there are other pending lawsuits that raise these same issues, and we are hopeful the court will have another opportunity to review them.”

“State National Bank brought this case because we are concerned about the threat that CFPB poses to us and our customers,” said Jim Purcell, Chairman of the Board and CEO, State National Bank of Big Spring. “Big banks might be able to cope with CFPB rules, but for us and banks like us, the costs and red tape spun out by this agency could become a slow death sentence. We are disappointed in the Supreme Court’s decision not to take our case, but we are also hopeful that these constitutional issues will still be examined in some future lawsuit.” 

The petition pointed to two constitutional problems in the CFPB’s structure: It is led by a single director that the president cannot remove at will, and Congress has no control over the bureau’s funding.  Because of these flaws, the CFPB operates with practically no oversight from either the President or Congress. The CFPB’s structure should be invalidated, rather than being allowed to serve as a blueprint for future regulatory agencies that are immune to the checks and balances required by the Constitution. 

A 2017 CEI report detailed a series of CFPB abuses against auto, mortgage, and payday lenders. CFPB enforcement actions against such industries not only abruptly and unjustly penalized lawful businesses but threatened to restrict consumers’ access to much-needed loans, illustrating the urgent need for review of the constitutionality of the bureau’s structure.

The lawsuit was on appeal from the United States Court of Appeals for the District of Columbia Circuit.

Contact CEI with questions directed to any or all of the three petitioners. View more about the case, State National Bank of Big Spring v. Mnuchin, at cei.org/doddfrank.