Appeals court says CFPB’s funding is constitutional

The U.S. Court of Appeals for the Second Circuit issued a decision Thursday in which it says the CFPB’s funding structure is constitutional as it was authorized by Congress and is bound by specific statutory provisions – therefore not offending the appropriations clause.

The U.S. Supreme Court is set to consider the bureau’s funding structure in October following the Fifth Circuit Court of Appeals decision that found it to be unconstitutional.

The lawsuit reviewed by the Second Circuit is related to a civil investigative demand (CID) the bureau served to a law firm that provides legal advice and services to debt collectors. After the Supreme Court ruled in 2020 that the CFPB’s leadership structure is unconstitutional, the bureau was granted ratification for the CID and enforcement action; however, the law office appealed and argued the Seila Law decision voided it.

In the challenge of the bureau’s funding, the Second Circuit argued against the Fifth Circuit’s unconstitutional determination and said “the [Supreme] Court has consistently interpreted the Appropriations Clause to mean simply that “the payment of money from the Treasury must be authorized by statute.”

 

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