Supreme Court: Funding of Consumer Financial Protection Bureau not unconstitutional

WASHINGTON (AP) — The Supreme Court A conservative-led attack on Thursday was dismissed as undermining Consumer Financial Protection Bureau.

The justices ruled 7-2 that the way the CFPB is funded does not violate the Constitution, reversing the lower court.

The CFPB was created after the 2008 financial crisis to regulate mortgages, car loans and other consumer finance. The lawsuit was filed by payday lenders who were challenging a Bureau rule.

The CFPB case is one of several major challenges to federal regulatory agencies in this period before the court, which has been open to limits on their operations for more than a decade. The CFPB, the brainchild of Sen. Elizabeth Warren, Democrat of Massachusetts, has long been opposed by Republicans and their financial backers.

Unlike most federal agencies, the Consumer Bureau does not rely on an annual budget process in Congress. Instead, it is funded directly by the Federal Reserve, with a current annual cap of about $600 million.

A federal appeals court in New Orleans, in a new ruling, said the fund violates the Constitution’s appropriations clause because it improperly shields the CFPB from congressional oversight.

Justice Clarence Thomas noted in his majority opinion that the earliest days of the Constitution were “the agency’s funding mechanism fits comfortably with the appropriations procedure of the first Congress.”

Justices Samuel Alito and Neil Gorsuch, Thomas’ colleagues on the court’s conservative panel, dissented. “The Court affirms a new statutory scheme that allows the powerful Consumer Financial Protection Bureau (CFPB) to bankroll its own agenda without any congressional control or oversight,” Alito wrote.

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The case was argued in the first week of court, seven months ago. Overturned decisions like Thursday’s 7-2 vote usually don’t take long, but Alito’s opinion was longer than the majority opinion, and two justices, Elena Kagan and Kedanji Brown Jackson, wrote separate opinions in the majority. .

While the US Chamber of Commerce and some other business interests supported payday lenders, mortgage bankers and other sectors regulated by the CFPB warned the court to avoid a sweeping ruling that would disrupt markets.

In 2020, the court Another CFPB case decided, ruled that Congress had improperly insured against removing the bureau’s chief. The judges said the director can be replaced at the discretion of the president but allow the bureau to continue functioning.


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