Supreme Court will hear Consumer Financial Protection Bureau case this week

October 1, 2023

The justices of the U.S. Supreme Court, this week, will hear a key case about the Consumer Financial Protection Bureau (CFPB). 

Oral arguments in the case, according to the Washington Postare scheduled to take place on Tuesday.

This will be one of the first cases that the justices hear in their new term, which begins on Monday, Oct. 2.

The justices are essentially going to decide the future of the CFPB.


The CFPB was created by the 2010 Dodd-Frank Act.

On its website, the CFPB states that it "is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive."

The CFPB, however, is different from other government agencies in at least one important way.

ABC News reports:

Unlike most agencies, the bureau is not dependent on annual appropriations from Congress, but instead gets its funding directly from the Federal Reserve. The idea when the agency was created following the recession in 2007-08 was to shield it from politics.

The question before the justices of the U.S. Supreme Court is, essentially, whether this funding mechanism is constitutional. Or, as the Post's George Will put it, "Does the statute that stipulates the CFPB’s funding constitute an unconstitutional surrender of power by Congress?"

Looking forward

The federal appellate court in New Orleans has already deemed the funding mechanism to be unconstitutional. Will explains why, writing:

To insulate the bureau even from oversight by future Congresses, the 2010 Congress made the bureau’s funding independent of Congress. It placed the bureau in the Federal Reserve System, which itself is funded outside the appropriations process by bank assessments and by interest on its own holdings. The CFPB simply decides how much money it wants . . .

This, according to Will, is patently unconstitutional as it bypasses the Constitution's appropriations clause. But, Will says that there is another problem.

He writes, "[B]ecause the president now controls the bureau’s director, the president will predictably veto any attempt by Congress to regain power over the bureau. It is gone forever, unless the court acts."

We will have to see how the justices of the Supreme Court rule on this issue. It is worth noting that the Supreme Court, in 2020, did rule that part of the legislation that created the CFPB was unconstitutional.

The Biden administration, in a court filing, has claimed that it would cause a "profound disruption" for the justices to uphold the appellate court's ruling against the CFPB.

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Thomas Jefferson
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