On Thursday, May 16, AP News reported that the Supreme Court upheld the Consumer Financial Protection Bureau (CFPB), rebuffing a challenge led by conservative groups. The justices voted 7-2 to affirm that the agency's funding mechanism does not violate the Constitution, overturning a previous ruling by a lower court.
|Unlike typical federal agencies, the CFPB's funding is not subject to the annual congressional budget process; instead, it receives direct funding from the Federal Reserve, currently capped at approximately $600 million annually.
A federal appeals court in New Orleans previously contended that this funding arrangement violated the Constitution's appropriations clause by circumventing congressional oversight.
The Consumer Financial Protection Bureau
Established in the aftermath of the 2008 financial crisis, the CFPB was built to oversee various aspects of consumer finance, including mortgages and car loans.
However, the recent case mentioned originated from objections raised by payday lenders against a CFPB rule, although it was not specified yet. This ruling marks one of several critical challenges facing federal regulatory agencies this term.
From there-the CFPB, championed by Democratic Senator Elizabeth Warren, has faced longstanding opposition from Republicans and their financial supporters.
Although some organizations, like the U.S. Chamber of Commerce, backed the payday lenders' legal challenge against the Consumer Financial Protection Bureau (CFPB), other stakeholders in industries regulated by the CFPB warned against a sweeping decision that could cause upheaval in financial markets.
In 2020, a Supreme Court ruling affirmed the president's power to remove the CFPB director as desired but ensured that the agency could still function.
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