CFPB in the Supreme Court: Oral Arguments

Today the Supreme Court heard oral arguments in the case of Consumer Financial Protection Bureau v. Community Financial Services Assn. The case came to the Supreme Court after a 5th Circuit Court ruled that the CFPB's funding structure was unconstitutional.

The CFPB funds its operations by requesting money from the Federal Reserve Board. The question at the heart of this case is whether that funding mechanism runs afoul of the Appropriations Clause of the Constitution. If the funding mechanism were to be found unconstitutional.

U.S. Solicitor General Elizabeth Prelogar argued on behalf of the Bureau. She argues that the CFPB's funding structure is similar to other agencies, going all the way back to the first agency - the Customs Service - all the way up through the other banking regulators today. She argued that this is nothing new or unprecedented.

Noel Francisco argued on behalf of two trade associations that brought the legal challenge against the Bureau's payday lending rule. Francisco argued that the CFPB's funding structure is unprecedented and that the structure violates the Constitution by giving the executive branch both the purse and the sword.

During today's oral arguments, several of the justices seemed skeptical of the trade association's arguments and questioned whether the appropriations clause sets any limits on Congress's ability to set funding for a federal agency. Most of the oral argument was centered on the question of constitutionality, with very little discussion of what remedies Congress might have if it were to be found unconstitutional.

The Court isn't expected to release a final decision until April of 2024, but if the questions posed and comments made by justices during today's oral argument are any indication, a ruling that the Bureau's funding structure is unconstitutional seems unlikely.

Today's hearing was well-covered in the trade press and elsewhere ... (Some articles below reside behind a paywall) 

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