The Consumer Financial Protection Bureau (CFPB) has too much power and is unconstitutional, according to a lawsuit filed Monday.
A company that supports bankruptcy lawyers argues there are no constraints on the power of the financial watchdog created under the Wall Street reform law, making it unconstitutional.
“We have a system of separation of powers and checks and balances, so we don’t want to give too much power to an agency, particularly one like this that doesn’t have any direct accountability to the people,” Miller said.
Morgan Drexen claims the agency tried to obtain information that should be protected by attorney-client privileges. The information the CFPB wanted included names, addresses and income information about the clients of lawyers who used the company’s services, it said.
The CFPB dismissed the lawsuit.
"We believe this work is within our authority and consistent with the ordinary course of a government investigation," a spokeswoman said in a statement to The Hill. "Our goal is to determine whether companies are complying with the law and seek appropriate remedies where that's not the case.”
The Morgan Drexen lawsuit was filed with the U.S. District Court for D.C. on Monday. It wants the CFPB's current structure declared unconstitutional along with the portion of the Dodd-Frank financial law that created it.
“You provide that kind of sensitive information to your lawyer and now suddenly an agency of the federal government wants to collect it, and it’s little strange, particularly in light of some of the other things that have been going on with data collecting. We’re worried about the overreach a little bit,” Miller said in an interview.
They claim that the CFPB attempted to regulate lawyers by attempting to gather the information, which would be an interference with state regulators like bar associations.
Lawyers “shouldn’t have to worry about federal regulators looking over their shoulder,” Miller said.
The plaintiffs are looking for the CFPB to be prevented from doing business until Congress can legislate new accountability controls, such as installing a board to lead it instead of a single director.
Republicans in Congress have previously questioned the agency’s data-gathering methods and purposes, though CFPB officials have maintained that their research is focused on broad market trends, not monitoring individuals.
The company is being joined in the lawsuit by Kimberly Pisinski, a Connecticut attorney.
This story was updated at 4:08 p.m.