CFPB Response in TransUnion Case Lays Groundwork for Potential Appeal to Fifth Circuit Ruling

Last month, the Fifth Circuit Court of Appeals issued a long-awaited ruling which found that the independent funding mechanism Congress established to insulate the Consumer Financial Protection Bureau from political interference violated the Constitution’s separation of powers clause. While no determinations have been made as to how the CFPB will proceed—whether appealing the ruling or revisiting its funding mechanism—a recent legal filing in another case could serve as the gameplan for the Bureau’s argument moving forward.

In a dispute between the CFPB and TransUnion in which the Bureau accused TransUnion of violating a 2017 consent order, TransUnion is now using the Fifth Circuit ruling to seek dismissal of the case, arguing that the CFPB should not be able to use unlawful funds to prosecute it.  

As American Banker notes, “In its response to TransUnion, the CFPB argued that the Fifth Circuit’s decision had no basis in case law, as no other ruling has challenged Congress’s ability to authorize spending by statute rather than appropriation. The court’s ruling also does not ‘make sense on its own terms,’ the CFPB wrote, noting that, contrary to the Fifth Circuit’s interpretation, Congress is able to oversee how the bureau spends money through statutory supervision provisions.”

The Bureau also says that the Fifth’s Circuit’s description of its funding mechanism as “novel” and “unprecedented” is plainly false, as several other agencies—notably the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC)—enjoy similar funding sources independent from Congressional appropriations.