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US Supreme Court maintains funding for Consumer Financial Protection Bureau – JURIST
The US Supreme Court sustained Thursday that the Consumer Financial Protection Bureau (CFPB) financing does not violate the Appropriations Clause and is constitutionally valid, in a decision authored by Minister Clarence Thomas.
O CFPB was created after the 2008 market crisis and “ensures that markets for consumer financial products are fair, transparent and competitive”. The agency is the primary means of enforcing federal consumer protection laws, enforcement of which was divided among multiple agencies before the creation of the CFPB.
The case in question challenged the CFPB’s funding under the Constitution’s Appropriations Clause. This clause states: “[n]o The money will be taken from the Treasury, but as a result of appropriations made by law.” For most agencies, this funding comes through the annual congressional budget. This requires agencies to request funds from Congress every year. CFPB funding is different. O relevant status states:
Each year (or quarter within that year), beginning on the designated transfer date, and each quarter thereafter, the Board of Governors will transfer to the [CFPB] of the combined earnings of the Federal Reserve System, the amount determined by the Director to be reasonably necessary to comply with the Bureau’s authorities under the Federal consumer financial laws, taking into account other amounts made available to the Bureau in the preceding year (or quarter thereof ).
The statute further establishes the maximum funding limit for the CFPB at twelve percent of the “total operating expenses of the Federal Reserve System.”
This financing mechanism was the subject of a challenge to the CFPB, which was initiated after the agency enacted a regulation that limited creditor access to consumer accounts following two failed withdrawal attempts. Due to annual recurring funding, the Community Financial Services Association of America, Limited argued that the CFPB lacked the necessary congressional oversight to comply with the Appropriations Clause. Because the CFPB director can request that the amount be transferred to the agency, subject to the funding limit, they argued that this undermines the purpose of the Appropriations Clause, which is to ensure that Congress has control over all federal spending.
The challenge centered on the language of the Appropriations Clause: in the words of Justice Thomas, “[t]The challenge for associations revolves solely around whether the Department’s financing mechanism constitutes an ‘Appropriation[n] made by law.’” Citing history and judicial precedent surrounding the interpretation of the Constitution’s language, Justice Thomas concluded that “the origins of the Appropriations Clause confirm that appropriations are necessary to designate specific revenues for identified purposes,” a standard that the CFPB meets.
The CFPB responded to the decision in a Press releasestating:
Today’s decision is a resounding victory for both American families and honest businesses, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent and competitive… As we have done since our inception, the CFPB will continue to fulfill the vital task of the consumer. protective work that Congress charged us to perform for the American people.
Senator Elizabeth Warren, who led the creation of the CFPB, posted on X (formerly Twitter), saying: “This is a huge victory for workers.”