Supreme Court to Hear Case on Legality of CFPB Funding Structure
Posted: Mar 01 2023
The Supreme Court announced has that it will hear a case challenging the CFPB’s funding structure on the grounds that it violates the separation of powers clause of the U.S. Constitution. Uniquely among federal agencies, the CFPB receives its funding directly from the Federal Reserve System based on a request from the bureau’s director.
A three-judge panel in the Fifth Circuit Court of Appeals ruled last year in the case of Consumer Financial Protection Bureau v. Community Financial Services Association of America that such a funding structure was unconstitutional. Specifically, the court ruled that in setting up the CFPB’s funding structure, Congress ceded direct control over the CFPB’s budget by insulating it from annual appropriation, as well as indirect control by making the agency’s source also insulated from the appropriations process.