WASHINGTON – A community bank in Texas is filing a class action suit this afternoon challenging the constitutionality of the Dodd-Frank Act and its establishment of the Consumer Financial Protection Bureau.
The suit, to be filed in federal court by State National Bank of Big Spring, will claim there are "no checks and balances" in Dodd-Frank, while taking issue with the "unrestraint power" that the government gives to the CFPB.
The group cites the CFPB's structure, which includes one unelected director who largely administers the roughly $400 million budget and has "unaccountable power."
The banking law has established all kinds of guidelines and restrictions supposed to deal with the causes of the financial crisis, and created adjunct ones as well, such as limits of debit card fees, which has been vehemently opposed credit unions. Meantime, the new consumer agency is in the process of rewriting dozens of consumers laws covering mortgages, credit cards, and a variety of other financial products and services.
"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 a news 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, so it is unclear whether the federal court will give it “standing” to challenge the law’s provisions.
"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, the former White House Counsel for President George H.W. Bush., who is representing the plaintiffs.