The Supreme Court agreed Monday to take up a case next term against the Consumer Financial Protection Bureau, a brainchild of Sen. Elizabeth Warren (D-MA), which could determine the fate of its authority to regulate banking and lending agencies through federal rules.
In a brief, unsigned order, justices agreed to consider the constitutionality of how the CFPB is funded after banking industry parties alleged the agency is unconstitutional under the appropriations clause of the Constitution. As it stands, the financial watchdog sidesteps standard congressional appropriations by only requiring the CFPB director to make requests directly to the Treasury Department.
"For the most part, the Plaintiffs’ claims miss their mark," the appeals court held."But one arrow has found its target: Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers."
“The CFPB’s critical work administering and enforcing consumer financial protection laws will be frustrated,” the Biden administration wrote in its brief. “And because the decision below vacates a past agency action based on the purported Appropriations Clause violation, the decision threatens the validity of all past CFPB actions as well.”
"Despite years of desperate attacks from Republicans and corporate lobbyists, the constitutionality of the CFPB and its funding structure have been upheld time and time again," Warren said in a statement."If the Supreme Court follows more than a century of law and historical precedent, it will strike down the 5th Circuit's decision before it throws our financial markets and economy into chaos.
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