October 04, 2023

SCOTUS hears arguments on CFPB’s funding constitutionality

Supreme Court Building

The U.S. Supreme Court yesterday heard oral arguments in the CFPB v. CFSA case. In July, NAFCU, CUNA, and the American Association of Credit Union Leagues (AACUL) filed a joint amicus brief in support of CFSA, urging the court to uphold the U.S. Fifth Circuit Court of Appeals ruling that the CFPB’s funding structure is unconstitutional.

“Since its inception, the CFPB has waged a war on Main Street with its overreaching regulations and those consequences have been felt by credit unions and the communities they serve,” said NAFCU President and CEO Dan Berger. “According to a NAFCU survey, 60 percent of credit union respondents said the bureau does not operate with consumers’ best interests in mind and over 50 percent have seen no difference in consumer protection and safety.”

The Department of Justice’s Solicitor General, arguing on behalf of the CFPB, highlighted examples of other agencies funded outside the appropriations process and compared the bureau to other federal banking regulators. Additionally, the Solicitor General conceded that standing appropriations cannot last forever, but contended that Congress can, at any time, remove the CFPB from standing appropriations and change the limits of the funding authority for the CFPB.

Counsel for CFSA noted concerns about the lack of checks and balances with the bureau’s current funding structure. CFSA argued that Congress inappropriately delegated its power of the purse to the executive branch because the CFPB can request funds at its discretion, which is a violation of the Appropriations Clause of the U.S. Constitution.

On the rebuttal, the Solicitor General questioned the court’s ability to determine limits for Congressional funding to government agencies, arguing that there is no standard for courts to apply to make a judgement on what funding level is too high or places a meaningful constraint on Congress.

“After the Supreme Court heard arguments regarding the constitutionality of the bureau’s funding, it is my hope consumers and credit unions will see increased transparency and accountability to ensure a safe, fair financial services space,” Berger concluded.

Stay tuned to NAFCU Today for updates on the case and relevant regulatory action from the CFPB.