Bank Allowed to Press Attack on Financial Protection Bureau

An attack on the constitutionality of the Consumer Financial Protection Bureau can move forward, an appeals court decided in the latest ruling over financial controls imposed on Wall Street by the Dodd-Frank Act.

The U.S. Court of Appeals in Washington revived a challenge to the agency and the initial appointment of its director, Richard Cordray.

A Texas bank, State National Bank of Big Spring, can return to a lower court in Washington to make its case against the bureau. The appeals panel found that a lower court improperly found that the bank didn’t have the right, known as legal standing, to file the case and so dismissed the lawsuit without addressing the constitutionality of the bureau.

The ruling also allows the bank to challenge the initial 18 months of Cordray’s term in office, when he served under a so-called recess appointment made by President Barack Obama without approval of the U.S. Senate. After a standoff with Senate Republicans over appointments, Cordray was confirmed in July 2013.

Senate Republicans have questioned whether actions Cordray took in those first 18 months can be overturned because of a U.S. Supreme Court ruling limiting a president’s power to make recess appointments.

The appeals court upheld the lower court decision to throw out challenges to two other parts of Dodd-Frank, the Financial Stability Oversight Council and the federal government’s power to liquidate financial institutions during a crisis.

The appeals case is State National Bank of Big Spring v. Lew, 13-5247, U.S. Court of Appeals, District of Columbia

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