Supreme Court Disappoints on Funding/Powers Question in Ruling in CFPB Case

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The Supreme Court today issued a disappointing ruling in CFPB v. Community Financial Services Association of America, a lawsuit challenging the unchecked funding of the Consumer Financial Protection Bureau (CFPB), which is funded by withdrawal from the Federal Reserve rather than by congressional appropriation. CEI legal and financial policy experts explain the problems with this ruling.

Dan Greenberg, CEI general counsel:

“The lesson of this decision is that if Congress refuses to do its job and instead behaves irresponsibly — that is, if Congress creates federal programs that it cannot then influence through its own budget process — then the Supreme Court will not stand in Congress’s way. This decision marks an alarming failure by the Court to police the proper exercise of Congress’s constitutional powers.

“Today’s ruling continues a troubling trend of recent American history: significant parts of the federal government have moved farther from public accountability. The Consumer Financial Protection Bureau, an independent federal agency, is a notable example, because it is essentially immune from the budget and funding decisions that are typically made by Congress for other agencies.

“Even though the Court found in 2020 that the CFPB was created unlawfully and determined that its leadership should be answerable to the President, nonetheless the agency was allowed to continue its operations.”

Iain Murray, director of CEI’s Center for Economic Freedom:

“Sadly, the Court has given the green light to Congress to abrogate its own power of the purse. We can expect future Congresses to come up with ever more inventive ways to allow the executive branch to fund its whims. The only hope for responsible government is for Congress to rediscover its own prerogatives and repeal unusual funding mechanisms for executive agencies that exercise more power over American citizens than the Post Office – starting with the CFPB.”

John Berlau, CEI director of finance policy:

“This unfortunate decision from the court underscores the need for Congress to change the structure of the CFPB and make it accountable under the appropriations process.

“There is a direct link between the CFPB’s lack of accountability to Congress and the policies it pursues that are damaging to economic freedoms of entrepreneurs and the very consumers it claims to protect. As shown in a recent CEI video, the CFPB is pursuing price controls on credit card late fees that will harm consumers paying their card bills on time, intrusive data grabs that infringe on consumer privacy, and censorship of speech by financial professionals on neighborhood crime.”


Report:  The Case Against the Consumer Financial Protection Bureau:

CEI Video about the CFPB case