The Supreme Court today announced it will review the constitutionality of the Consumer Financial Protection Bureau’s (CFPB) funding, an unusual arrangement of unchecked funding from the Federal Reserve rather than congressional appropriation. Lower courts have split on the issue, the upshot of a legal challenge brought by payday lenders. CEI experts praised the court for hearing the case. CEI previously filed a lawsuit on this subject in the D.C. Circuit in National Bank of Big Spring v. Mnuchin.
Devin Watkins, CEI Attorney:
“The Supreme Court’s review of CFPB funding is an excellent development. This is an issue that CEI first brought to the Court’s attention in State National Bank of Big Spring v. Mnuchin. Congress must have some control over the CFPB to ensure public accountability. Congress’s power of the purse is a necessary and constitutional check on presidential power, and our federal legislators should responsibly exercise that power – both by clarifying the CPFB’s mission and ensuring that all regulated parties receive notice, due process, and a jury finding of wrongdoing before any CFPB punishment can occur.”
Iain Murray, CEI Senior Fellow:
“The CFPB’s current funding structure is a constitutional absurdity. No executive agency should receive a monetary supply without the affirmative consent of Congress every year. The absence of congressional power in this case has led to a degree of arrogance in CFPB directors that is inappropriate in agency heads. The Supreme Court will, I hope, restore the constitutional order and finally bring this rogue agency to heel.”
John Berlau, CEI Senior Fellow and Director of Finance Policy:
“CFPB’s bypassing of the Congressional appropriations process — enabled by Dodd-Frank — has allowed it to escape accountability for regulation that imposes crushing costs to community banks, credit unions, and the very consumers it claims to protect. For instance, the proposed CFPB rule setting inflexible $8 price controls on most credit card late fees would have a range of negative economic consequences particularly for middle-class and lower-income consumers, as well as smaller banks and credit unions that issue credit cards. These consequences would likely include higher costs of credit for everyone, a pullback of credit card rewards that benefit the middle class, and a shrinkage in credit in particular for lower-income consumers. Should the Supreme Court provide constitutional accountability to the CFPB by putting it under appropriations, Congress should thoroughly review these costly, misguided policies before granting the CFPB even a penny of funding.”