SCOTUS Upholds CFPB Funding Structure
The Supreme Court this morning upheld the funding structure of the Consumer Financial Protection Bureau (CFPB). In a 7 to 2 decision, the court determined that the CFPB’s funding mechanism complies with the Constitution’s Appropriations Clause.
Justice Clarence Thomas authored the majority opinion, while Justices Samuel Alito and Neil Gorsuch dissented. The case centered around how the CFPB receives its funding: unlike other federal agencies, which rely on the annual appropriations process in Congress, the CFPB draws a capped amount of money annually from the Federal Reserve under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The ruling safeguards the agency’s continued operations and regulatory actions.
Challengers argued that this funding mechanism violated the appropriations clause, which states that ‘no money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.' However, the majority rejected this argument, explaining that an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes. According to the majority, the statute providing the Bureau’s funding meets these requirements.
Justice Kagan’s concurring opinion was joined by Justices Sotomayor, Kavanaugh, and Barrett. She agrees with the court’s opinion and notes that the funding scheme, ‘if transplanted back to the late-18th century, would have fit right in.’ Kagan also emphasizes that the flexibility and diversity evident during the founding period continue to support the constitutionality of the CFPB’s funding.
Justice Jackson offered her own concurring opinion, emphasizing that she would have relied solely on the notion that the law passed by Congress satisfies the requirements of the appropriations clause.
Justice Alito however, joined by Justice Gorsuch, expressed dissatisfaction with the majority decision. He contends that today’s ruling diminishes the significance of the Appropriations Clause, reducing it to a minor vestige.
In Alito’s perspective, the central question in this case is whether the Consumer Financial Protection Bureau (CFPB) is financially accountable to Congress in the manner demanded by the Appropriations Clause. He argues that historical context suggests it is not.
The industry and legal community are likely to share extensive commentary as they dissect the 59-page decision issued by SCOTUS. We will continue to closely track and share ongoing discussions about the case’s application and ramifications in the coming months.