Court denies motion for small Texas bank to intervene in PHH, CFPB case

Back to square one for State National Bank

State National Bank of Big Spring, Texas hit a major roadblock in its fight against the Consumer Financial Protection Bureau after a judge on Tuesday threw out its motion to intervene in the landmark case between PHH and the CFPB.

The motion was a new plan from the bank, along with Competitive Enterprise Institute, which advocates for limited government, and the 60 Plus Association, a nonprofit that represents the interests of senior citizens, to get its case heard by the court after being in limbo since about July 2016.

Back in 2012, State National Bank filed suit against the federal government, claiming that the CFPB’s “unprecedented, unchecked power” violates the Constitution’s separation of powers.

The stance fits right in with the court’s decisions in October 2016 in the PHH case that the CFPB’s current structure allows the director to wield far too much power, more than any other agency in the government.

When PHH initially won the case against the CFPB, it was great news for State National Bank, but after the CFPB asked the court to rehear the case en banc, and won, State National's fate became questionable again.

As a result of the changes in the PHH case, the plaintiffs in State National Bank of Big Spring, Texas v. Lew filed a “Motion To Intervene In Any En Banc Proceeding That May Be Granted” in the PHH case. This was filed before the judge granted the en banc hearing, but the judge did not address the motion from State National Bank until after.

The latest blog post from Ballard Spahr by Barbara Mishkin gives an update on the situation, stating that the D.C. Circuit denied the motion to intervene.

This puts State National Bank’s case back in an uncertain state.

The last ruling on the State National Bank case came in July 2016 when a federal judge tossed out a part of the lawsuit that challenged President Obama's in-recess appointment of Cordray.

The judge decided to hold off on making decisions about the rest of the case until the PHH case was finalized.

That means State National Bank might have a long wait ahead. According to the court, arguments in the appeal between the CFPB and PHH are scheduled to start May 24, 2017.

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