The Consumer Financial Protection Bureau (CFPB) was on the hot seat in the Supreme Court October 3 as oral arguments in the case challenging its constitutionality and funding began.
In the case being heard, the Community Financial Services Association (CFSA) is seeking to block the enforcement of Consumer Financial Protection Bureau rules designed to restrict payday lending products. The CFSA is arguing that Congress violated the Constitution’s appropriations clause when it granted the CFPB a portion of the Federal Reserve’s operating budget. The US Fifth Circuit Court of Appeals found in favor of the CFSA, using language suggesting that only funds appropriated through the annual Congressional process are legal.
If the Court sides with the Fifth Circuit, the implications for CFPB are significant, and could include a requirement that they come to Congress for annual approval of their budget. And that means Congressional oversight. In addition, Congressional Republicans are looking to restructure the Bureau by creating a five-member commission,
replacing the current sole director.
A Supreme Court decision in the case is not expected until Spring 2024.
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