U.S. Supreme Court to Review Challenge to CFPB Funding

February 27, 2023 — Press Release

Court Should Reverse Dangerous Fifth Circuit Ruling, Which Could Gut Consumer Watchdog and Destabilize the Entire Economy

WASHINGTON – Today, the U.S. Supreme Court announced that it will review Consumer Financial Services Association of America v. Consumer Financial Protection Bureau, a dangerous decision by the U.S. Court of Appeals for the Fifth Circuit that threatens 11 years of work by the Consumer Financial Protection Bureau (CFPB) and could even destabilize a wide range of agencies from the Federal Reserve Board to the Social Security Administration. In a ruling wildly out of step with other courts, the Fifth Circuit found the funding mechanism of the CFPB unconstitutional. 

“The Fifth Circuit’s holding that the method of funding the CFPB authorized by Congress violates the Appropriations Clause is radical and unprecedented,” said Lauren Saunders, associate director of the National Consumer Law Center. “At a time of increasing congressional dysfunction and threatened government shutdowns, the Supreme Court must repudiate the idea that the Constitution requires funding to go through an annual appropriations process, which could risk the Federal Reserve Board’s stability and oversight over the economy, and even endanger the funding of Social Security and Medicare.”

“The attacks on the CFPB’s funding are without merit, and the Fifth Circuit’s decision is contrary to those of the other courts that have considered the constitutionality of the CFPB’s funding structure,” Saunders said. “I’m confident that when the Supreme Court justices examine this case, they will reject the Fifth Circuit’s poorly reasoned decision, which jeopardizes the CFPB’s ability to stand up to financial predators and the ability of all bank regulators to maintain a stable financial marketplace for responsible banks and financial institutions.” 

The CFPB’s funding structure is not unique. Other financial regulators–including the Federal Deposit Insurance Corporation (FDIC) and the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA)– do not receive their funding through annual appropriations. 

“In addition to the radical and catastrophic impact of striking down Congress’s method of funding the CFPB, other implications of the Fifth Circuit’s ruling— potentially requiring invalidation of 11 years’ worth of CFPB rules and possibly enforcement actions, supervision examinations, and other actions undertaken with that funding—could cause chaos in the marketplace,” Saunders added. 

Additional Resources

• NCLC Digital Library Article: Practice Implications of Fifth Circuit Ruling that CFPB Funding is Unconstitutional
• SCOTUSblog: Community Financial Services Association of America, Limited v. Consumer Financial Protection Bureau
• Commentary: Aziz Huq, Politico, Opinion | Will the Supreme Court Torpedo the Financial System?
• Commentary: Mark Joseph Stern, Slate, Republican Leaders Might Not Be Trying to Kill Social Security and Medicare. But Their Judges Are. 
• Commentary: Adam Levitin, Credit Slips, Dual Insulation? The Fifth Circuit’s Factual Misunderstanding of CFPB Funding

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Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.