Consumer Financial Protection Bureau v. Community Financial Services Ass'n of America, Ltd.
Consumer Financial Protection Bureau v. Community Financial Services Ass'n of America, Ltd., 601 U.S. 416 (2024), was a United States Supreme Court case where the Court ruled that the funding mechanism of the Consumer Financial Protection Bureau (CFPB), which is allocated from the Federal Treasury budget rather that through Congressional appropriations, is constitutional under the Appropriations Clause.
| Consumer Financial Protection Bureau v. Community Financial Services Ass'n of America, Ltd. | |
|---|---|
 | |
| Argued October 3, 2023 Decided May 16, 2024 | |
| Full case name | Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited, et al. |
| Docket no. | 22-448 |
| Citations | 601 U.S. 416 (more) |
| Argument | Oral argument |
| Questions presented | |
| Whether the court of appeals erred in holding that the statute providing funding to the Consumer Financial Protection Bureau (CFPB), 12 U.S.C. 5497, violates the Appropriations Clause, U.S. Const. Art. I, § 9, Cl. 7, and in vacating a regulation promulgated at a time when the CFPB was receiving such funding. | |
| Holding | |
| The funding scheme of the Consumer Financial Protection Bureau is constitutional and in accordance with historic funding mechanisms. | |
| Court membership | |
| |
| Case opinions | |
| Majority | Thomas, joined by Roberts, Sotomayor, Kagan, Kavanaugh, Barrett, Jackson |
| Concurrence | Kagan, joined by Sotomayor, Kavanaugh, Barrett |
| Concurrence | Jackson |
| Dissent | Alito, joined by Gorsuch |
| Laws applied | |
| U.S. Const. art I, § 9, cl. 7 | |
Background
editThe CFPB was created after the financial crisis of 2007–2008 as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act. While initially aimed to protect consumers from bad mortgage lenders that had partially created the financial crisis, the CFPB has also involved itself in other areas at high risk of fraudulent activity that harm consumers, such as credit cards, credit reporting, and for-profit colleges. As it is generally seen as pro-consumer, the CFPB had generally been contested by conservative politicians and large corporations.[1]
One of the first legal challenges to the operations of the CFPB arose from the Supreme Court case Seila Law LLC v. Consumer Financial Protection Bureau (2020), which challenged the inability for the director of the CFPB to be removed by the president except for cause, and was argued by that nature, the whole of the CFPB was unconstitutional. The Supreme Court agreed that the director of the CFPB was considered an officer of the United States and thus could be removed by the president as to maintain the separation of powers, but otherwise the agency's structure was constitutional.
Lower courts
editThe Community Financial Services Association of America (CFSAA), a trade group for the payday lending industry, filed a lawsuit in 2018 challenging a CFPB rule restricting payday lending. The United States District Court for the Western District of Texas upheld the rule. The CFSAA appealed to the United States Court of Appeals for the Fifth Circuit, which in October 2022 upheld the rule against an Administrative Procedure Act challenge, but held it must be vacated because it was created when the agency was funded by the Federal Reserve. The Fifth Circuit held this funding mechanism was unconstitutional.[2]
Supreme Court
editThis section needs expansion with: Overview of ruling and dissent. You can help by adding to it. (October 2024) |
Less than a month after the Fifth Circuit decided the case, the CFPB filed a petition for a writ of certiorari at the Supreme Court, and the Biden administration asked for the Supreme Court to "fast track" the case to be heard during the 2022 Supreme Court term.[2][3] The Supreme Court granted certiorari on February 27, 2023, and denied the motion to expedite consideration of the case.[4] Oral argument was held on October 3, 2023.[5][6][7] The case was argued, on behalf of the CFPB, by Solicitor General Elizabeth Prelogar and, on behalf of the CFSAA, by former Solicitor General Noel Francisco.
The Court ultimately ruled in favor of the CFPB in a 7–2 decision written by Justice Thomas.[8][9]
References
edit- ^ Hiltkez, Michael (July 23, 2015). "Consumer protection: Why do Republicans hate the CFPB so much?". Los Angeles Times. Retrieved May 16, 2024.
- ^ a b Golde, Kalvis (November 18, 2022). "Government appeals decision against Consumer Financial Protection Bureau". SCOTUSblog. Retrieved November 21, 2022.
- ^ Ford, Matt; Noah, Timothy (February 27, 2023). "The Supreme Court Could Destroy the Consumer Financial Protection Bureau". The New Republic. ISSN 0028-6583. Retrieved February 28, 2023.
- ^ Howe, Amy (February 27, 2023). "Court will review constitutionality of consumer-watchdog agency's funding". SCOTUSblog.
- ^ "Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited". SCOTUSblog. Retrieved October 3, 2023.
- ^ Iacurci, Greg (October 3, 2023). "Supreme Court case may gut the CFPB: Consumer watchdog's 'future is on the line,' group says". CNBC. Retrieved October 3, 2023.
- ^ Bravin, Jess; Ackerman, Andrew (October 3, 2023). "Supreme Court Justices Wary of Argument Against Financial Watchdog's Funding". The Wall Street Journal. News Corp. Retrieved October 3, 2023.
- ^ Mangan, Dan (May 16, 2024). "Supreme Court rules Consumer Financial Protection Bureau funding structure is legal". CNBC. Retrieved October 30, 2024.
- ^ "CONSUMER FINANCIAL PROTECTION BUREAU ET AL. v. COMMUNITY FINANCIAL SERVICES ASSOCIATION OF AMERICA, LTD., ET AL" (PDF). Supreme Court.
External links
edit- Text of Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited, 601 U.S. 416 (2024) is available from: Justia Oyez (oral argument audio) Supreme Court (preliminary print)