Bloomberg News
The Supreme Court ruled on Thursday that the Consumer Financial Protection Bureau’s funding is constitutional and satisfies the requirements of the Appropriations Clause.
The majority 7-2 opinion by Justice Clarence Thomas was joined by Chief Justice John G. Roberts, Jr. and Justices Elena Kagan, Brett M. Kavanaugh, Sonia Sotomayor, Amy Coney Barrett and Ketanji Brown Jackson. A dissenting opinion was filed by Justice Samuel A. Alito, Jr., who was joined by Justice Neil M. Gorsuch. A separate concurring opinion was filed by Justice Kagan, joined by Justices Sotomayor, Kavanaugh and Barrett. Justice Jackson filed a separate concurring opinion.
For most federal agencies, Congress provides funding on an annual basis, which forces the agencies to ask Congress for renewed funding every year.
“The Consumer Financial Protection Bureau is different,” Thomas wrote for the majority. “In this case, we must decide the narrow question whether this funding mechanism complies with the Appropriations Clause. We hold that it does.”
The issue that the court had to decide is whether the U.S. Court of Appeals for the 5th Circuit erred in 2022 when it found that the CFPB violated the appropriations clause.
In 2022, a three-judge panel of the 5th Circuit, all appointed by President Trump, found that the agency’s funding through the Federal Reserve System meant it was “doubly insulated” from congressional control because the CFPB does not have to petition Congress for funds each year. Instead, Congress authorized the CFPB to draw its funding from the Federal Reserve System, subject only to an inflation-adjusted cap.
The case began in 2018, when two Texas trade groups sued the CFPB, challenging the bureau’s ability to issue the first federal payday lending rule — which will now go into effect. The 5th Circuit judges found that the CFPB had the authority to issue the payday rule but ruled that its funding was unconstitutional. In November, the CFPB
Many had expected the high court would uphold the CFPB’s funding based on oral arguments in October. Going forward, several rules and lawsuits that have been on hold pending the outcome of the case, Consumer Financial Protection Bureau v. Community Financial Services Association of America, will now proceed.
This story is being updated.
