Lawsuit Challenges CFPB’s Actions, Constitutionality

The ""Consumer Financial Protection Bureau (CFPB)"":http://www.consumerfinance.gov/ faces a lawsuit that not only challenges its authority to collect personal financial information from attorneys and their paraprofessionals but also deems unconstitutional the agency itself.

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""Morgan Drexen, Inc.,"":http://morgandrexen.com/ a software provider that has among its clients several bankruptcy attorneys, and Kimberly Pisinski, an attorney who uses Morgan Drexen's services, filed the lawsuit Monday in the United States District Court for the District of Columbia.

The lawsuit comes after the CFPB demanded Morgan Drexen release personal information of bankruptcy clients, including names, addresses, attorney notes, and income information.

Morgan Drexon and Pisinski argue this information is ""NOT public record and is protected under the attorney client privilege.""

In order to obtain this information, the CFPB has ""used improper and coercive tactics against Plaintiffs,"" states the court filing.

""Plaintiffs seek an order halting these tactics and declaring CFPB's structure to be unconstitutional, and declaring unconstitutional the provisions of the Dodd-Frank Act creating and empowering the CFPB,"" the filing continues.

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In response to the allegations, the CFPB told _DS News_ Tuesday, ""We believe this work is within our authority and consistent with the ordinary course of a government investigation. Our goal is to determine whether companies are complying with the law and seek appropriate remedies where that's not the case.""

Morgan Drexen claims already to be suffering financial strain due to the CFPB's demands and says it may suffer more if the CFPB obtains the requested information.

If Morgan Drexen is forced to release the requested personal data to the CFPB, the company might lose business as attorneys might turn elsewhere for services in order to protect their clients. Furthermore, the action might cost Pisinksi and other attorneys business as their clients might cease working with them, knowing that their personal information is not protected.

Morgan Drexen also asserts it could face legal action for releasing the information under laws regarding attorney-client privilege, ""particularly if Morgan Drexen produces such data to an unconstitutional entity and one that is under investigation by the GAO.""

Pisinski and Morgan Drexen's lawsuit allege the CFPB to be unconstitutional and cite Judicial Watch President Tom Fitton, who called the Bureau ""an out-of-control government agency that threatens the fundamental privacy and financial security of Americans.""

The lawsuit goes on to complain, ""By delegating effectively unlimited powers to CFPB, by eliminating Congress's power of the purse over CFPB, by eliminating the President's power to remove CFPB's Director at will, and by limiting judicial review of CFPB's actions and legal interpretations, Title X of the Dodd-Frank Act violates the Constitution's separation of powers.""

The plaintiffs ask that the court ""[d]eclare unconstitutional the provisions of the Dodd-Frank Act creating and empowering CFPB.""