Lawsuit poses existential threat to CFPB and, through precedent, to the Federal Reserve, Medicare, and other crucial government services

WASHINGTON, D.C. – The U.S. Supreme Court tomorrow will hear arguments for Consumer Financial Protection Bureau v. Community Financial Services Association. In CFPB v. CFSA, payday lenders call for the Court to stop CFPB operations – an outcome that would eliminate essential guidance for mortgage lenders and other financial firms and cause economic chaos. Payday lenders claim Congress can fund agencies only through its annual appropriations process – a radical, baseless argument contradicted by Constitutional text, judicial precedent, and historical practice. Last year, the Fifth Circuit Court of Appeals became the only court to ever accept this argument when it declared CFPB funding unconstitutional.

“Congress established funding streams outside of its annual appropriations process for the Federal Reserve Board, FDIC, Medicare, Social Security, and other crucial government agencies. The Fifth Circuit’s promise that its ruling only affects the CFPB and will not invalidate similarly funded agencies is as reassuring as an arsonist claiming your office won’t be affected when he incinerates the adjoining building,” said Mike Calhoun, president at the Center for Responsible Lending (CRL). “Even during government shutdowns, these agencies – along with the Supreme Court itself – are open and operational because of this independent funding. Even if lawsuits don’t eliminate these agencies, they could exacerbate government shutdowns by making essential financial oversight, support for seniors, and more subject to the political whims of Congress – something Congress itself recognized as foolish.”

Calhoun added, “The Supreme Court has a choice in its ruling: it can side with judicial precedent, historical practice, common sense, and text of the Constitution – or it can side with payday lenders and economic chaos.”

Additional Background

Congress has enacted independent funding for governmental bodies since America’s Founding. Today, around two-thirds of annual federal government spending is funded outside of the annual Congressional appropriations process.

Congress has established independent funding structures for a wide array of government agencies, including: Citizenship and Immigration Services; Consumer Financial Protection Bureau; Farm Credit Administration; Federal Deposit Insurance Corporation (FDIC); Federal Housing Finance Agency; Federal Reserve Board; Medicare; National Credit Union Administration; Office of the Comptroller of the Currency (OCC); Social Security; United States Mint; United States Patent and Trademark Office; and the United States Postal Service.


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