“Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers,” the judges wrote.
The appeals court ruling marked the latest victory for the finance industry, which has fought for years in Congress and the courts to blunt the CFPB’s reach and limit its ability to police financial services. Republican lawmakers have also worked for years to stifle the CFPB and revamp its structure, arguing the agency lacks accountability.
“Even among self-funded agencies, the Bureau is unique,” Judge Cory Wilson wrote Wednesday. “The Bureau’s perpetual self-directed, double-insulated funding structure goes a significant step further than that enjoyed by the other agencies on offer.”
The CFPB Wednesday declined to say whether it would appeal the decision to the full 5th Circuit. CFPB spokesperson Sam Gilford said “there is nothing novel or unusual about Congress’s decision to fund the CFPB outside of annual spending bills.”
“Other federal financial regulators and the entire Federal Reserve System are funded that way, and programs such as Medicare and Social Security are funded outside of the annual appropriations process,” Gilford added. “The CFPB will continue to carry out its vital work enforcing the laws of the nation and protecting American consumers.”
The Supreme Court in 2020 ruled that another provision of the agency’s structure — a single director who could only be fired for cause, rather than at will, by the president — violated the Constitution’s separation of powers.