Washington Watch: Supreme Court to hear case that will decide the future of consumer financial protection

by | Feb 27, 2023 | Stock Market

The U.S. Supreme Court on Monday said it would hear a case that will decide the future of the Consumer Financial Protection Bureau.  The case revolves around the constitutionality of the CFPB’s funding mechanism. After the CFPB issued a payday-lending rule in 2017, industry groups challenged the rule in court, arguing in part that the agency’s funding structure–which draws money from the Federal Reserve rather than annual Congressional appropriations–is unconstitutional. Last fall, the Fifth Circuit federal appeals court rejected most of the trade groups’ arguments against the rule but ruled that the CFPB’s funding structure violates the Constitution’s appropriations clause and separation of powers doctrine. 

That decision not only overturned the payday-lending rule and put a legal cloud over every action the CFPB has taken since its launch 12 years ago, it also raised questions about a host of other government agencies and programs that are funded outside the annual Congressional appropriations process, legal experts say.  “This is existential for the CFPB,” said David Silberman, a former CFPB official and a senior fellow at the Center for Responsible Lending, a nonprofit research and policy group. If the Supreme Court were to rule that the agency is …

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