The US Supreme Court has dismissed an effort to undermine the funding of the Consumer Financial Protection Bureau (CFPB).
The Community Financial Services Association of America (CFSA), a trade organization representing payday lenders, challenged the CFPB, claiming that the agency’s funding structure was in violation of the appropriations clause of the US Constitution.
Established under the Dodd-Frank Act in 2010, the CFPB is funded differently from most federal agencies, receiving a capped annual budget from the Federal Reserve instead of direct appropriations from Congress.
The case was presented to the Supreme Court in October 2023 following a lower court ruling that favored the CFSA. In response to the Supreme Court’s ruling, the CFPB stated: “For years, lawbreaking companies and Wall Street lobbyists have been scheming to defund essential consumer protection enforcement. The Supreme Court has rejected their radical theory that would have devastated the American financial markets. The Court repudiated the arguments of the payday loan lobby and made it clear that the CFPB is here to stay.”
The agency emphasized its role as a federal watchdog against predatory practices in the financial sector, noting that since its inception in 2011, it has secured over $20 billion in consumer relief and addressed more than 4 million consumer complaints.
US President Joe Biden remarked: “In the face of years of attacks from extreme Republicans and special interests, the court made clear that the CFPB’s funding authority is constitutional and that its strong record of consumer protection will not be undone.”
Senator Elizabeth Warren, who proposed the CFPB before her election to the Senate, expressed her approval of the ruling, stating: “The CFPB is here to stay. In a 7-2 decision, the Supreme Court followed the law and confirmed that the CFPB’s funding structure is constitutional. For the last decade, the consumer agency has fought the big banks and predatory lenders that try to cheat hardworking people. As of this week, the CFPB has returned more than $20 billion in ill-gotten funds to American families. This isn’t the last attack on the CFPB we’ll see from Wall Street, the banks, and their Republican allies.”