Supreme Court Upholds CFPB Funding, Rejects Conservative Challenge
In a significant ruling, the US Supreme Court has upheld the funding structure of the Consumer Financial Protection Bureau (CFPB), delivering a 7-2 decision that the agency's funding through the Federal Reserve does not violate the Constitution. The challenge was initially raised by two lender trade associations and supported by Republican state attorneys general, arguing that the CFPB's funding mechanism bypasses Congress's power over federal spending as outlined in the Appropriations Clause. Justice Clarence Thomas, writing for the majority, countered that the funding arrangement adheres to constitutional requirements.
The ruling overturns a previous decision by the Fifth Circuit Court of Appeals that had deemed the CFPB's funding structure unconstitutional. Critics, including the U.S. Chamber of Commerce and various business interests, had cautioned against a sweeping decision, suggesting it could cause market disruptions. Despite these concerns, the Supreme Court's decision affirms the current funding cap of approximately $600 million from the Federal Reserve, allowing the CFPB to continue its role in protecting consumers from predatory financial practices without direct dependence on Congress's annual budget allocations.
Additionally, the Supreme Court has addressed the CFPB's leadership structure, which had been previously ruled unconstitutional in 2020, allowing the agency to continue operating with its current director. The decision by the high court is seen as a reinforcement of the regulatory agency's independence, despite dissent from conservative justices Samuel Alito and Neil Gorsuch, who argued that the decision weakens Congressional oversight of independent agencies.
