Supreme Court Declines Texas Banks Challenge to CFPB’s Structure with Steven Mnuchin as the Named Party

The U.S. Supreme Court turned away a challenge to the structure of the Consumer Financial Protection Bureau, the agency that Republicans say has stifled economic growth through over-regulation. The Texas Bank v US Secretary Steve Mnuchin, the “Foreclosure King”, who has a major conflict of interest was named as the Defendant.

The justices rejected an appeal, pressed by a community bank in Texas and two advocacy groups, that contended the agency has so much power and so little accountability it violates the constitutional separation of powers.

Justice Brett Kavanaugh took part in the dispute when he was an appeals court judge, precluding his participation at the Supreme Court. Kavanaugh didn’t take part in the high court’s decision to reject the appeal.

The Trump administration is among those attacking the CFPB’s structure, though U.S. Solicitor General Noel Francisco urged the court not to get involved until it receives an appeal that all nine justices can hear. In court papers, Francisco said the 2010 law that set up the agency unconstitutionally restricted the president’s power to fire its director.

The CFPB, set up in the wake of the 2008 financial crisis, regulates credit cards, auto loans and other consumer finance products. Supporters say its independence helps insulate it from political pressures, letting it focus on protecting consumers from financial scams and predatory loans.

The rejected appeal also argued that the CFPB’s funding system is unconstitutional. The agency gets its budget from a fund within the Federal Reserve and doesn’t have to depend on congressional appropriations.

The Supreme Court will probably have other chances to scrutinize the CFPB in the next year. Francisco pointed to three pending appeals court cases that he said raise the same issues.

The case is State National Bank of Big Spring v. Mnuchin, 18-307.