WASHINGTON, D.C. — 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.