CFPB's Latest Existential Threat: Legal Challenges to Its Funding

The Consumer Financial Protection Bureau again faces an existential threat in the courts — this time over whether the agency’s funding by the Federal Reserve System is constitutional.

Earlier this month, five judges on the U.S. Court of Appeals for the Fifth Circuit signaled their view that the CFPB’s funding mechanism violates the Constitution’s separation of powers because it happens outside of the congressional appropriations process.

The opinion is not binding, and the five judges represent less than a third of the 17 active judges on the Fifth Circuit Court of Appeals. Still, a decision by the Second Circuit Court of Appeals in another legal challenge to the CFPB’s finding source is expected in the next six months.

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