Blog ››› ››› DAVID LYLE
Consider the following scenario: Congress passes an important economic regulation designed to address a major national problem over massive opposition from conservative and corporate interests. Defeated in the democratic process, these forces then launch a legal attack, using a novel theory to claim the law is unconstitutional. Right-wing media cheer the suit, claiming it is a fight for freedom.
Sound familiar? It should, given the unresolved fate of the Affordable Care Act, but this time the reform in the right's crosshairs is not health care. It's consumer financial protection. A new lawsuit and right-wing media campaign have taken aim at the Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank law in response to the 2008 financial market collapse. The purpose of CFPB is to "promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services." Although the legal arguments made in the suit are questionable, the case should not be dismissed as harmless. The right-wing media's proven ability to move dubious legal claims into mainstream debate combined with a conservative federal judiciary sympathetic to corporate interests mean the CFPB suit bears close scrutiny.
The lawsuit alleges that CFPB and another entity, the Financial Stability Oversight Council (FSOC), which oversees the law's "too big to fail provisions," are unconstitutional because key provisions of Dodd-Frank are too vague and do not provide sufficient oversight of the agencies' actions. They also challenge President Obama's recess appointment of CFPB Director Richard Cordray following a Republican filibuster of his nomination.
Legal experts are already expressing skepticism on the suit's merits. Deepak Gupta, an appellate lawyer and former CFPB official, called the suit "more a political stunt than a serious legal challenge" and questioned whether the plaintiffs challenging the law have standing to do so. ("Standing" is a legal requirement that a party to a case be at least at risk of suffering a real harm from the action complained of.) A small community bank in Texas is a plaintiff in the case (along two conservative organizations), and an article in the American Banker questioned whether the bank is large enough to be subject to the provisions of which it complains.