The Supreme Court is considering a key case regarding the funding of the Consumer Financial Protection Bureau (CFPB), with the majority of justices seeming likely to support current funding methods.
Case Background: The CFPB, established to protect consumers from deceptive practices by financial institutions after the 2008 crash, is funded through banking fees rather than congressional appropriation.
* In 2021, the Fifth Circuit Court of Appeals ruled the CFPB’s funding structure unconstitutional, asserting it violates the appropriations clause of the Constitution. This case has been appealed to the Supreme Court.
Legal Arguments: Parties defended differing views about the CFPB’s funding in front of Supreme Court justices.
* Solicitor General Elizabeth Prelogar defended the CFPB’s existing funding mechanism, claiming the Constitution’s framers created similar funding structures and precedents abound.
* Conversely, Noel Francisco, representing payday lenders challenging the regulations, argued that Congress should not permit agencies to pick their own perpetual appropriation.
Justice Reactions: The judges displayed mixed reactions during oral arguments.
* Chief Justice John Roberts called Prelogar’s argument “a very aggressive view of Congress’s authority,” whereas Justices Brett Kavanaugh and Sonia Sotomayor pointed out that the funding could be changed by Congress anytime and that a significant percent of the federal budget is funded in a similar way.
* Justice Elena Kagan noted that appropriation methods like the CFPB’s were common at the founding of the nation, suggesting that the challenge was disregarding 250 years of history.
Impact: Many other agencies, including the Federal Reserve and the Federal Deposit Insurance Corp., are funded in a similar manner to the CFPB, making the outcome of this case critical for their respective futures. A decision is expected by the end of the court term.
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