CFPB Asks SCOTUS to Uphold Constitutionality of Funding

Nov 23, 2022Federal Regulation, Litigation, News

Last week, the Consumer Financial Protection Bureau (CFPB) filed a petition asking the U.S. Supreme Court to undo a ruling by the Fifth Circuit Court of Appeals that determined the Bureau’s funding structure was unconstitutional.

The CFPB said the decision “threatens to inflict immense legal and practical harms” on both the financial sector and consumers, according to Reuters. The agency filed its petition less than a month after the ruling, so that the Supreme Court can hear the case during its current term.

The ruling from the 5th Circuit Court of Appeals held that the process of the CFPB’s independent funding through the Federal Reserve violated the Constitution’s principle of separation of powers, as it ensures the Bureau is not funded through budgets passed by Congress.

In its petition, the CFPB said that the 5th circuit depended on an erroneous understanding of the Appropriations Clause of the Constitution that requires government spending to be approved by Congress.

“Congress enacted a statute explicitly authorizing the CFPB to use a specified amount of funds from a specified source for specified purposes. The appropriations clause requires nothing more,” said the CFPB.

Republicans have opposed the CFPB since its creation in 2010 through the Dodd-Frank Act under the Obama Administration. The Supreme Court previously ruled that the CFPB Director’s protection from being fired for reasons other than for cause was unconstitutional.

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