The Supreme Court said Monday it will take up a Republican-led challenge to the Consumer Financial Protection Bureau, a case that could threaten how the consumer watchdog agency functions.
The case the justices agreed to hear centers on the agency’s funding. Unlike a majority of agencies, the CFPB does not get its funding from the annual budget process in Congress. Instead, it is funded directly by the Federal Reserve. The agency’s budget is capped at 12% of the total operating expenses of the Federal Reserve System. In the 2022 fiscal year, the agency received about $640 million.
The case the justices will hear began when two associations sued over the agency’s Payday Lending Rule. They argued in part that the agency’s funding structure violated the Constitution, improperly insulating the agency from congressional supervision. A trial court ruled against the associations, but the appeals court agreed the funding structure was unconstitutional. Other courts that had previously looked at the agency’s funding structure found no issue.
Just three years ago, in 2020, the high court dealt with a different challenge to the agency. That case involved the agency’s structure. that Congress had improperly insulated the head of the bureau from removal. The justices said the agency could continue to operate but that its director had to be removable by the president at will.
The CFPB was the brainchild of Sen. Elizabeth Warren of Massachusetts and former Democratic presidential candidate.
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