Digital Library: Practice Implications of Fifth Circuit Ruling That CFPB Funding Unconstitutional

By: Lauren Saunders

October 26, 2022 — Article

On October 19, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) funding mechanism is unconstitutional, and that the CFPB’s Payday Lending Rule is invalid because it was promulgated using unconstitutional funding. The substantive decision that the CFPB’s independent funding mechanism violates the Appropriations Clause is radical and unprecedented.  But even more extreme is the decision that the remedy for this unconstitutional funding mechanism is that the CFPB’s Payday Lending Rule must be found invalid because it was promulgated using unconstitutional funding.

This approach endangers numerous past and present CFPB actions, including all CFPB promulgated rules and rule amendments.