Supreme Court Rejects Case Challenging CFPB Funding Structure

Supreme Court Rejects Case Challenging CFPB Funding Structure

( – The Supreme Court rejected a challenge from several Republican lawmakers against the Consumer Financial Protection Bureau (CFPB) on May 16.

The agency, founded during the years that followed the Great Recession, claims to stand against predatory lending practices while enforcing laws written to protect consumers. However, conservative lawmakers have repeatedly accused the agency of largely operating outside of legal oversight, leaving it open to significant corruption.

They have also argued that its use of Federal Reserve funding, which equals up to $600 million annually, left the CFPB, as reported by the New York Post, “unconstitutionally unaccountable” to elected representatives in the US. The move to end the agency’s funding through the Federal Reserve was backed by over 130 Republicans in Congress. Two associations representing lenders also joined the challenge against the independent agency. Conservatives have attempted to dissolve the agency since it was founded in 2010 as the brainchild of Senator Elizabeth Warren (D-MA).

However, the largely conservative Supreme Court sided with President Joe Biden and rejected those claims in a 7-2 decision. SCOTUS Justice Clarence Thomas said the court concluded that “appropriations need only identify a source of public funds and authorize the expenditure of those funds for designated purposes to satisfy the Appropriations Clause.” Lawmakers behind the CFPB’s formation said its funding structure was uniquely developed to protect it from unjust political pressures.

Justices Neil Gorsuch and Samuel Alito, both conservatives, dissented from the majority opinion. They said their decision was based on the dangerous power Congress wields over American finances, calling it an “effectual weapon.” They also said that it undermines the Appropriations Clause while warning of the excessive powers given to the CFPB with little oversight.

Conservatives won a victory against the agency in 2020 after SCOTUS ruled that its leadership structure was unconstitutional. John Roberts, who served as chief justice at the time of the ruling, said the agency’s structure violated separation of powers. However, the Supreme Court fell short of dissolving the organization. The ruling specifically mandated that the president may remove the agency’s director at their discretion.

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