Constitutional Challenge to CFPB Still Kicking

WASHINGTON (CN) — With the D.C. Circuit set to resolve a constitutional challenge to the Consumer Financial Protection Bureau, a federal judge deferred deciding a Texas bank's similar claim.

State Spring National Bank of Big Spring says the CFPB violates the separation of powers, but the D.C. Circuit is considering the same claims against the bureau in a case raised by PHH Corp.

As such U.S. District Judge Ellen Huvellle deferred deciding the issue at summary judgment Tuesday. Huvelle did reject the bank's claim that the recess appointment of CFPB Director Richard Cordray was unconstitutional.

President Barack Obama first appointed Cordray as CFPB director in 2012, after the Senate failed to take action his nomination in July the previous year.

Though the Supreme Court ruled against similar recess appointments Obama made to the National Labor Relations Board, Cordray faced a different situation because Obama renominated him in 2013, and the Senate confirmed his nomination that July.

Cordray exercised final decision-making authority concerning several CFPB policies as a recess appointee, but Huvelle found that Cordray saved those regulations from State Spring's constitutional challenge by ratifying his recess actions with a notice in the Federal Register.

Huvelle actually dismissed State Spring's challenge in full back in 2013, but the D.C. Circuit revived the case last year.

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