A Washington federal judge dismissed a constitutional challenge to the Consumer Financial Protection Bureau, finding the plaintiffs didn't have standing to sue because they failed to show they suffered harm.
The plaintiffs argued the Dodd-Frank Act violated the separation of powers by "delegating effectively unlimited power" to the bureau and another entity created under the Dodd-Frank Act, the Financial Stability Oversight Council. U.S. District Judge Ellen Segal Huvelle found the plaintiffs failed to allege actual injuries and that claims of future injuries were too speculative to meet the legal standard for being able to sue.
Texas-based State National Bank of Big Spring, think tank Competitive Enterprise Institute and advocacy group the 60 Plus Association sued the U.S. Department of the Treasury and the bureau last June. They were later joined by the attorneys general of Alabama, Georgia, Kansas, Michigan, Montana, Nebraska, Ohio, Oklahoma, South Carolina, Texas and West Virginia.
Lead counsel for the private plaintiffs, C. Boyden Gray of Boyden Gray & Associates, filed a notice of appeal this afternoon, taking the dispute to the U.S. Court of Appeals for the D.C. Circuit.
"[I]t is disturbing that the opinion—and the government—ignored the very real harm Dodd-Frank has inflicted on [the bank] and the customers who rely on the bank to provide loans for everything from their home to their small business," he said in a statement. The decision also "misconstrues" Dodd-Frank's effect on the states, he added.
Gregory Jacobs of O'Melveny & Myers also represented the private plaintiffs. A spokeswoman for the Consumer Financial Protection Bureau declined to comment.
The case was one of several filed against the government over the creation of the Consumer Financial Protection Bureau. Earlier lawsuits focused on President Barack Obama's recess appointment of Richard Cordray as the bureau's director, but the Senate confirmed his appointment last month.
The bank argued the Consumer Financial Protection Bureau's regulations had hurt its business and that, more generally, it had standing to sue because it was a financial institution regulated by the agency. Huvelle found the injuries claimed by the bank were either "self-inflicted" or too speculative.
The decision comes on the heels of a new constitutional challenge filed against the agency in Washington federal district court late last month. In that case, the plaintiffs-a law firm and a company that supports law firms-claimed the agency's creation not only violated separation of powers, but also that the bureau was overstepping its authority by attempting to regulate the practice of law.