CFPB Lays Out Possible Counter to Fifth Circuit Funding Decision

Source: American Banker

An appeals court ruling last week on the Consumer Financial Protection Bureau's funding structure is already threatening the agency's ability to enforce its rules.

One day after the U.S. Court of Appeals for the Fifth Circuit found the CFPB's funding structure to be unconstitutional, TransUnion used the decision to bolster its request for a dismissal of charges leveled by the bureau.

Earlier this year, the CFPB accused TransUnion of violating the terms of a 2017 consent order, in which the credit rating firm agreed to, among other things, stop misleading customers about its terms of use.

In its response to TransUnion, the CFPB argued that the Fifth Circuit's decision had no basis in case law, as no other ruling has challenged Congress's ability to authorize spending by statute rather than appropriation. The court's ruling also does not "make sense on its own terms," the CFPB wrote, noting that, contrary to the Fifth Circuit's interpretation, Congress is able to oversee how the bureau spends money through statutory supervision provisions. 

The response also refutes several other claims made by the Fifth Circuit, including that the funding structure is "novel" and "unprecedented," noting that the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. also are not funded through annual spending bills.