The Supreme Court said it would decide on the constitutionality of the CFPB, which is funded by the Federal Reserve and not Congress.
The Supreme Court said Monday it would decide on the constitutionality of the Consumer Financial Protection Bureau, created in the wake of the 2008 Wall Street collapse and funded directly by the Federal Reserve.
If the high court’s conservative majority agrees, it could cast doubt on the Federal Reserve as well because the Fed relies on bank fees and interest income for its operating expenses, not an annual appropriation from Congress. The CFPB was championed by Democrats, including now-Sen. Elizabeth Warren, to protect consumers and borrowers from deceptive and unfair practices by banks and mortgage lenders. It has been steadily opposed by much of the lending industry and many Republicans.
The Democrats who wrote the Dodd-Frank Act in 2010 tried to protect the bureau from political interference from the White House or Congress. The director was given a semi-independent status, and the bureau was authorized to obtain up to 12% of the annual revenues of the Federal Reserve for its operating expenses.The Supreme Court’s conservatives have cast a skeptical eye on the bureau.
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