A federal appeals court has found the Consumer Protection Bureau’s Funding Structure unconstitutional. | So Good News


A federal appeals court ruled the agency’s actions unconstitutional on Wednesday, prompting both sides to take action.

Three judges of the 5th Circuit Court of Appeals ruled that funding the Consumer Financial Protection Bureau through the Federal Reserve instead of Congress violates the US separation of powers law. The group — all of whom were appointed by President Trump — also abandoned the payday loan law that the lobbying organizations that brought the lawsuit.

“Even among organizations that give their money, this office is unique,” Judge Cory Wilson wrote to the court. “The self-sustaining, self-sustaining, dual-centered approach is going far beyond what other organizations enjoy.” The agency — created in the wake of the 2008 financial crisis by the Dodd-Frank Act and charged with protecting consumers in the financial industry — did not respond. Government Offices the question of whether to appeal or not.

“There is nothing unusual or unusual about Congress’ decision to fund the CFPB outside of the annual budget,” a CFPB spokesperson said. Head of State. “Other federal financial regulators and the entire Federal Reserve System are funded in this way, and programs like Medicare and Social Security are funded outside of the annual budget. The CFPB will continue to do its important job of enforcing national laws and protecting American consumers.”

Chris Peterson, a law professor at the University of Utah who has served in senior positions at the CFPB and Department of Defense under Obama, wrote that the decision was “unprecedented.” He added that the team also did not answer a number of important questions, such as “what about past and current research who made payments using a cash flow method like a payday loan? Are fraudsters simply refusing to comply with the bureau’s requests.” Peterson, who is also the Democratic candidate for governor of Utah in 2020, predicted that the case will go to the Supreme Court.

Sen. Elizabeth Warren, D-Mass., who helped create the CFPB, wrote: “This is an unconstitutional and reckless decision.” The agency has “returned billions of dollars to the American people by doing its job, and its spending is legal,” he said. “Right-wing conservatives are questioning any rules the CFPB enacts to protect consumers and businesses alike.”

Other Democratic lawmakers were of the same opinion.

Robert Weissman, president of the non-profit advocacy group Public Citizen, said the court’s decision was “ignorant. [the] A long-established and long-standing practice of funding financial institutions, as well as review in many other courts, to rule that the CFPB’s funding is unconstitutional. He asked for the decision to be reversed.

Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, said “since its inception, cynics and reactionaries in politics and law have been trying to destroy this organization.” The Fifth Circuit’s ruling, “which ignores 100 years of policy to protect regulators from political gamesmanship, is the latest in a decade of political battles to bring the agency to its knees so that the worst perpetrators of our financial system can once again prey on working families.”

Many Republican lawmakers welcomed the decision.

Sen. Pat Toomey, R-Pa., a member of the Senate Banking, Housing and Urban Affairs Committee, tweeted: “The CFPB has been an unconstitutional and unaccountable agency since its inception.” He added that he “has been saying that the CFPB needs to be embraced by Congress.”

Similarly, Rep. Patrick McHenry, RN.C., a member of the House Financial Services Committee, said in a statement that he was happy to see the decision because, “As Republicans have said before, the CFPB’s ‘double-insulated,’ independent financial instruments are unconstitutional.” “Bringing the CFPB under financial control would make the American people more accountable through their elected representatives.” Spending Act that would.

In addition, Jeffrey Clark, the head of the Department of Justice under Trump, supported the decision, writing in a tweet, “it was good to see the Seventh Amendment that the CFPB’s funding methods were in violation of the laws against interfering with the powers of Congress.”

The decision follows other recent challenges and challenges for the agency, one of the most notable being the Supreme Court’s ruling in June 2020 that the CFPB director’s impeachment defense was unconstitutional. It said the president could remove the person at will, but allowed the agency alone to stand.


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