Constitutional Opinion No. 2026-0127
Case Information
- Content Scored
- Prompt Corrective Action Directive — In the Matter of Small Business Bank, Lenexa, Kansas (Docket No. 26-039-PCA-SM)
- Source
- Board of Governors of the Federal Reserve System
- Author
- Michele Taylor Fennell, Associate Secretary of the Board
- Publication Date
- 2026-06-29
- Content Type
- Official Government Document (Federal Regulatory Enforcement Action)
- Opinion Issued
- 2026-07-02
- AFCS Version
- 1.0
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Holding
The Federal Reserve's Prompt Corrective Action Directive against Small Business Bank scores Mixed (42). The document presents a constitutional tension inherent to the Federal Reserve's role: an unelected independent agency exercising sweeping regulatory authority over a private institution — imposing government controls on dividends, deposit rates, executive compensation, asset growth, branching, and new business lines — all without direct democratic authorization. These are significant AFCS negatives under Articles III, X, and IV. The offsetting positive is Article IX: the Fed is discharging a legitimate accountability function by catching a significantly undercapitalized bank before depositor losses occur. The score lands in Mixed territory because these tensions are real and roughly balanced.
Articles Triggered
The Federal Reserve imposes 13-provision operational restrictions on a private bank outside direct democratic accountability.
The PCA Directive catches a significantly undercapitalized bank with prior consent order violations and forces remediation to protect depositors.
Restrictions on asset growth, branching, deposits, and new business lines directly hamper the bank's capacity to serve small businesses.
The Directive mandates federal restrictions on senior executive officer bonuses and prohibits capital distributions to private shareholders.
Score Breakdown
| Article | Title | Weight | Score | Weighted |
|---|---|---|---|---|
| III | Government Size | 10/10 | 25 | 250 |
| IX | Government Accountability & Corruption | 10/10 | 68 | 680 |
| X | Economic Nationalism | 9/10 | 32 | 288 |
| IV | Taxation & Spending | 7/10 | 28 | 196 |
| Final | 010/1010/109/107/10 | 42 | ||
| Sum of weighted contributions: 1414 | ||||
It is the judgment of this Court that Opinion No. 2026-0127 is hereby entered into the record, in accordance with the America First Constitutional Standard. The score stands. The reasoning is published. The record is public.