WASHINGTON, D.C. – The Supreme Court just announced it will hear Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited. The lawsuit, which was brought by a trade association for payday lenders, poses an existential threat to funding for the Consumer Financial Protection Bureau (CFPB) and, by extension, similarly funded agencies.
“This case imperils the stable functioning of our government and our economy – all so payday lenders can continue to bleed borrowers dry,” said Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending (CRL). “If the Supreme Court accepts this deeply flawed argument against CFPB funding, it would set a dangerous precedent that would be used to challenge agencies with legally indistinguishable funding, including the Federal Reserve, FDIC, Medicare, and Social Security.”
This case arises from an illogical ruling, by a three-judge panel of the U.S. Court of Appeals for the 5th Circuit, that proclaimed the CFPB’s funding is unconstitutional, in part, because it derives from outside an annual congressional appropriations process. Going against judicial restraint, the 5th Circuit then concluded that all CFPB actions are unconstitutional and the CFPB’s 2017 Payday Rule must therefore be vacated.
Throughout U.S. history and across our government, Congress has authorized funding streams for government agencies separate from an annual congressional appropriations process. The Constitution requires that funding for government activities be authorized by a law passed by Congress, but the Constitution does not prescribe a method that the 5th Circuit inaccurately portrays as mandatory. The CFPB’s funding was authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
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