OPINION: This article may contain commentary which reflects the author's opinion.
The U.S. Supreme Court will hear arguments in the case against the Consumer Financial Protection Bureau, an agency that Democrat Sen. Elizabeth Warren helped create following the 2008 market crash.
“The issue before the court is how the CFPB is funded – the financial watchdog agency bypasses typical congressional appropriations and simply requires the CFPB director to make requests to the Treasury Department for funds as needed. The banking industry parties challenging the CFPB say that is unconstitutional, citing the Appropriations Clause of the Constitution,” Fox News reported.
Last October, a three-judge panel on the U.S. Court of Appeals for the 5th Circuit ruled that the funding mechanism violated the Constitution and that the CFPB’s funding should be appropriated by Congress from the U.S. Treasury.
“The Bureau’s funding scheme is unique across the myriad independent executive agencies across the federal government,” the panel noted in its ruling, written by Judge Cory Wilson. “It is not funded with periodic congressional appropriations.”
The Biden administration appealed the ruling to the Supreme Court and oral arguments will likely begin in the fall with a ruling next year.
“The Obama-era CFPB was formed in the aftermath of the 2008 market crash in an effort to protect consumers from financial schemes, with the authority to regulate banking and lending agencies via federal rules. Warren, now a Democrat senator from Massachusetts, is credited for creating the agency, although she never led it. Warren’s 2020 presidential campaign website says she ‘came with the idea for the CFPB before the crisis even began and then fought successfully to turn her idea into a reality,'” Fox News added.
“This agency was Elizabeth’s idea, and through sheer force of will, intelligence, and a bottomless well of energy, she has made, and will continue to make, a profound and positive difference for our country,” President Obama said in July 2011.
Former acting CFPB Director Mick Mulvaney, who served under President Trump, once called the agency “Elizabeth Warren’s baby.”
Breitbart News reported:
The case the justices agreed to hear centers on the agency’s funding. Unlike a majority of agencies, the CFPB does not get its funding from the annual budget process in Congress. Instead, it is funded directly by the Federal Reserve. The agency’s budget is capped at 12% of the total operating expenses of the Federal Reserve System. In the 2022 fiscal year, the agency received about $640 million.
The case the justices will hear began when two associations sued over the agency’s Payday Lending Rule. They argued in part that the agency’s funding structure violated the Constitution, improperly insulating the agency from congressional supervision. A trial court ruled against the associations, but the appeals court agreed the funding structure was unconstitutional. Other courts that had previously looked at the agency’s funding structure found no issue.
Supreme Court will hear case challenging Consumer Financial Protection Bureau funding https://t.co/wksNrH7FG9
— CNBC Now (@CNBCnow) February 27, 2023
The U.S. Court of Appeals for the 5th Circuit said the Consumer Financial Protection Bureau’s funding structure is unconstitutional.
Today, the U.S. Supreme Court said it will hear the case: pic.twitter.com/YXEJKnQcHc
— David Gura (@davidgura) February 27, 2023
In calling on the justices to take on the case, a group of 16 mostly Republican-led states called the CFPB “a failed experiment in administrative governance.”
Warren was not happy on Monday to hear the news from the Supreme Court.
“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.
“If the Supreme Court follows more than a century of law and historical precedent, it will strike down the Fifth Circuit’s decision before it throws our financial markets and economy into chaos. The CPFB has already sustained a blow to its autonomy from the Supreme Court in 2020 through a Trump administration challenge, in which the nine justices ruled that a president could fire a CPFB director at will. Prior to that decision, a CFPB director, after appointment by the Senate, would serve five years and could only be fired for malfeasance, inefficiency, or neglect of duty,” she added.
