Appeals court revives challenge to consumer agency

  • By Sam Hananel Associated Press
  • Friday, July 24, 2015 1:20pm
  • Business

WASHINGTON — A federal appeals court on Friday revived a legal challenge to the Consumer Financial Protection Bureau, the federal office created to protect consumers in financial dealings with banks, lenders and credit card companies.

The federal appeals court in Washington ruled that a Texas bank could challenge the constitutionality of the watchdog agency’s powers even though the bank’s conduct has not been subject to any enforcement.

A federal district judge had dismissed the lawsuit in 2013 after finding the bank had no legal standing to bring the claims.

The independent agency was created in 2010 by a sweeping law that overhauled financial regulations following the 2008 financial crisis. Wall Street interests and Republicans in Congress fiercely opposed the agency.

The appeals court sent the case back to the lower court to consider the challenges.

Eleven states had joined the lawsuit filed by State National Bank of Big Spring, Texas, to argue that Congress delegated too much power to the bureau. They also argue that it should not be headed by just one person and that President Barack Obama illegally appointed the agency’s director, Richard Cordray, during a congressional recess. Cordray was later confirmed by the Senate.

A three-judge panel of the appeals court said those arguments could proceed. Judge Brett Kavanaugh said the bank did not have to intentionally violate the law in order to launch a constitutional challenge.

But Kavanaugh said the bank could not challenge the constitutionality of the Financial Stability Oversight Council, created by the financial overhaul law to designate certain financial companies deemed “too big to fail” for additional regulatory oversight.

The court also rejected the bank’s challenge to part of the law that allows the Treasury secretary to order liquidation of a failing financial company that poses a risk to the financial stability of the U.S. government.

The government has argued that the bureau’s structure and powers are constitutional.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Customers walk in and out of Fred Meyer along Evergreen Way on Monday, Oct. 31, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Everett council rebukes Kroger for plans to close Fred Meyer store

In the resolution approved by 6-1 vote, the Everett City Council referred to store closure as “corporate neglect.”

Logo for news use featuring Snohomish County, Washington. 220118
AG sues owner of bikini barista stands in Snohomish County

Lawsuit alleges Jonathan Tagle subjected workers to sexual harassment, retaliation and wage theft.

Inside the passenger terminal at Paine Field Airport on Wednesday, Sept. 3, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Post names Paine Field as one of the best U.S. airports

Reporters analyzed 2024 data from 450 airports, including wait times to get through TSA security and ease of getting to the airport.

A semi truck and a unicycler move along two sections of Marine View Drive and Port Gardner Landing that will be closed due to bulkhead construction on Wednesday, Sept. 3, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Port of Everett set to begin final phase of bulkhead work, wharf rebuild

The $6.75 million project will reduce southbound lanes on West Marine View Drive and is expected to last until May 2026.

Customers walk in and out of Fred Meyer along Evergreen Way on Monday, Oct. 31, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Kroger said theft a reason for Everett Fred Meyer closure. Numbers say differently.

Statistics from Everett Police Department show shoplifting cut in half from 2023 to 2024.

Funko headquarters in downtown Everett. (Sue Misao / Herald file)
FUNKO taps Netflix executive to lead company

FUNKO’s new CEO comes from Netflix

Inside El Sid, where the cocktail bar will also serve as a coffee house during the day on Tuesday, Aug. 12, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
New upscale bar El Sid opens in APEX complex

Upscale bar is latest venue to open in APEX Everett.

A Boeing 737 Max 10 prepares to take off in Seattle on June 18, 2021. MUST CREDIT: Bloomberg photo by Chona Kasinger.
When Boeing expects to start production of 737 MAX 10 plane in Everett

Boeing CEO says latest timeline depends on expected FAA certification of the plane in 2026.

Kongsberg Director of Government Relations Jake Tobin talks to Rep. Rick Larsen about the HUGIN Edge on Thursday, July 31, 2025 in Lynnwood, Washington. (Olivia Vanni / The Herald)
Norwegian underwater vehicle company expands to Lynnwood

Kongsberg Discovery will start manufacturing autonomous underwater vehicles in 2026 out of its U.S. headquarters in Lynnwood.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Garbage strike over for now in Lynnwood, Edmonds and Snohomish

Union leaders say strike could return if “fair” negotiations do not happen.

Richard Wong, center, the 777-X wing engineering senior manager, cheers as the first hole is drilled in the 777-8 Freighter wing spar on Monday, July 21, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Boeing starts production of first 777X Freighter

The drilling of a hole in Everett starts a new chapter at Boeing.

Former barista claims Starbucks violated Everett law

The part-time worker wanted more hours, but other workers were hired instead, the lawsuit alleges.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.