As lenders and trade associations look to get a handle on what the regulatory body might do, a Texas bank and two advocacy organizations joined forces last week to file a lawsuit in U.S. District Court in hopes of proving the Consumer Financial Protection Bureau is unconstitutional.

According to court documents, State National Bank of Big Spring from Big Spring, Texas, along with the 60 Plus Association and the Competitive Enterprise Institute are listed as plaintiffs against a host of defendants, including Treasury Secretary Timothy Geithner, CFPB director Richard Cordray, Federal Reserve Chairman Ben Bernanke as well as Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp., and Mary Shapiro, chairman of the Securities and Exchange Commission.

Among the complaints articulated in the suit, the plaintiffs contend the Dodd-Frank Wall Street Reform and Consumer Protection Act authorizes the CFPB to prescribe rules identifying unfair, deceptive or abusive acts or practices under federal law in connection with any transaction with a consumer for a consumer financial product or service such as a vehicle loan contract.

"But the act provides no definition for ‘unfair’ or ‘deceptive’ acts or practices, leaving those terms to the CFPB to interpret and enforce, either through ad hoc litigation or through regulation. Nor is the CFPB bound by prior agencies’ interpretation of similar statutory terms," the plaintiffs asserted.

"Nor does the Act provide meaningful limits on what the CFPB can deem an ‘abusive’ act or practice," they continued. "(The act) leaves that term to be defined by the CFPB, subject only to the requirement that the CFPB not define an act or practice to be ‘abusive’ unless it materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or takes unreasonable advantage of a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service.

"Those nominal limits offer no transparency or certainty for lenders, because the limits consist exclusively of subjective factors that can only be ascertained on a case-by-case, borrower-by-borrower, and can be interpreted broadly by the CFPB because the agency is subject to no effective checks or balances by the other branches," they went on to say.

The suit filed in the U.S. District Court of the District of Columbia goes on to say that Cordray acknowledged the plaintiffs’ concerns during a Jan. 24 hearing before a subcommittee of the U.S. House Committee on Oversight and Government Reform.

"CFPB director Cordray stated that the act’s use of the term ‘abusive’ is ‘a little bit of a puzzle because it is a new term. The CFPB has ‘been looking at it, trying to understand it, and we have determined that that is going to have to be a fact and circumstances issue. It is not something we are likely to be able to define in the abstract. Probably not useful to try to define a term like that in the abstract; we are going to have to see what kind of situations may arise where that would seem to fit the bill under the prongs,’" the plaintiffs recapped in court documents.

The suit aims to win five awards by the court:

—An order and judgment declaring unconstitutional the provisions of the Act creating and empowering the CFPB, and enjoining defendants Cordray and the CFPB from exercising any powers delegated to them by Title X of the act.

—An order and judgment declaring unconstitutional Cordray’s appointment as CFPB director, and enjoining Cordray from carrying out any of the powers delegated to the office of CFPB director by the act.

—An order and judgment declaring unconstitutional the provisions of the Act creating and empowering the FSOC, and enjoining Defendants from exercising any powers delegated to them by Title I of the act.

—Costs and attorneys fees pursuant to any applicable statute or authority.

—Any other relief the court deems just and appropriate.

White House officials told the Los Angeles Times they would oppose any efforts to hinder the bureau’s operations.

"The president fought to put into law the strongest consumer protections in history, and he will continue to fight any effort from our opponents to weaken the CFPB or water down its ability to protect middle-class families," White House spokeswoman Amy Brundage said in this report.

The entire suit can be found online here.

The CFPB was one of the main discussions at this year’s National Automotive Finance Association’s 16th annual conference. SubPrime Auto Finance News’ recap of a CFPB official’s presentation from that event can be found here.

CFPB Announces Changes to Senior Leadership

Before the lawsuit arrived in U.S. District Court, the CFPB revealed several changes to senior leadership positions within the agency. Among those named are: associate director for supervision, enforcement and fair lending; general counsel; senior advisor and counselor to the director; assistant directors for the office of financial empowerment and the office of financial education; and ombudsman.

"I am very pleased to announce these updates to the CFPB leadership team," Cordray said. "As the CFPB continues moving forward with its important work, we are leveraging the collective expertise of our dedicated senior staff to better serve consumers and fulfill the CFPB’s mission of making consumer financial markets more fair, transparent, and competitive."

The following is a rundown of CFPB’s staffing changes:

Steven Antonakes

Antonakes, who will now serve as the associate director for supervision, enforcement and fair lending at the CFPB, previously served as the assistant director of large bank supervision at the bureau. Antonakes began his professional career as an entry level bank examiner with the Commonwealth of Massachusetts Division of Banks in 1990. He served in numerous managerial capacities before being appointed by successive Governors to serve as the Commissioner of Banks from December 2003 until November 2010, becoming only the second career bank examiner to ever serve in that capacity.

In addition, Antonakes served as first state voting member of the Federal Financial Institutions Examination Council (FFIEC), as the vice chairman of the Conference of State Bank Supervisors (CSBS), and as a founding member of the governing board of the Nationwide Mortgage Licensing System (NMLS).

CFPB officials added Paul Sanford, who has been serving as chief of staff for large bank supervision, will now serve as acting assistant director of large bank supervision.

Meredith Fuchs

Fuchs, who will now serve as CFPB general counsel, joined the bureau last year as principal deputy general counsel before serving as chief of staff to Cordray. Prior to joining the CFPB, she served as chief investigative counsel of the U.S. House Committee on Energy and Commerce.

Previously, Fuchs held positions as vice president and general counsel of the National Security Archive at George Washington University, litigation partner at Wiley Rein LLP, and an officer on the D.C. Bar Board of Governors. She is the recipient of the American Library Association’s James Madison Award. Ms. Fuchs served as a law clerk for Judge Patricia M. Wald on the D.C. Circuit Court of Appeals and Judge Paul L. Friedman on the U.S. District Court for the District of Columbia.

Garry Reeder, who has been serving as senior advisor to the deputy director, will now serve as acting chief of staff.

Len Kennedy

Kennedy, who will now serve as senior advisor and counselor to Cordray, most recently held the position of general counsel and CFPB associate director. In his role, he assembled and led the legal team that advises the director and bureau leadership.

Prior to joining the CFPB, Kennedy served as general counsel, corporate secretary and chief government affairs officer for Sprint Nextel Corp., where he advised the board of directors, chief executive officer, and senior management on all aspects of the company’s business and legal affairs. He previously served for five years as General Counsel of Nextel.

In 2008, Kennedy was a recipient of Corporate Board Member’s America’s Top General Counsel Award. He twice served as a senior legal advisor at the Federal Communications Commission and has served on the board of many Washington-area non-profit organizations, including as co-president and co-chairman of the Appleseed Foundation, a national, nonpartisan legal organization promoting systemic reform locally.

Camille Busette

Busette joined the CFPB as assistant director of the office of financial education. Before joining the Bureau, Busette was a senior fellow at the Center for American Progress where she focused on financial opportunities for low income populations.

Previously, Busette served as vice president of EARN, a non-profit provider of micro savings services to low income families in the United States. She also was the deputy director of government relations for PayPal where she managed PayPal’s regulatory advocacy globally. She also headed the privacy function at Intuit, and the consumer and market research division at NextCard.

Clifford Rosenthal

Rosenthal joined the CFPB as assistant director of financial empowerment. Before joining the Bureau, he served for more than 30 years as president and CEO of the National Federation of Community Development Credit Unions, the nonprofit association for credit unions serving low-income communities.

Officials recapped Rosenthal laid the framework for the establishment of the Community Development Financial Institutions (CDFI) Fund with concept papers he wrote in the late 1980s and co-founded the CDFI Coalition in 1990. His work at the federation was marked by innovative efforts to expand the reach of credit unions to low-income populations, by establishing networks and programs targeting the African-American, Latino, and disability communities. He received the highest awards of the National Credit Union Foundation, the Opportunity Finance Network, the Insight Center for Community Economic Development, the Urban Homesteading Assistance Board, the Network of Latino Credit Unions and Professionals, and others.

Wendy Kamenshine

Kamenshine, the CFPB Ombudsman, began at the bureau last July as the acting ombudsman to establish the CFPB ombudsman’s office and officially joined the CFPB last month.

Kamenshine previously served as the senior ombudsman for the Department of Homeland Security’s Citizenship and Immigration Services Ombudsman’s Office. This year, she started her second term as chair of the Coalition of Federal Ombudsmen, an interagency group of federal ombudsmen.

Before joining the federal government, Kamenshine practiced international trade law with the law firm Akin Gump Strauss Hauer & Feld LLP and was a research associate at the economics consulting firm, Economists Incorporated.