Finance

SCOTUS Upholds Consumer Watchdog's Funding Mechanism

MAY 16 2024·Updated MAY 17 2024

Story

Image credit: Kevin Dietsch/Staff/Getty Images News via Getty Images

The Facts

The US Supreme Court (SCOTUS) ruled 7-2 on Thursday that the Consumer Financial Protection Bureau's funding structure doesn't violate the Appropriations Clause of the Constitution.
CNN
Most federal agencies receive funding from Congress, while the CFPB can fund itself by withdrawing up to 12% of the Federal Reserve's operating expenses.
wsj.com
Drawing on English, colonial, and early American history, Justice Clarence Thomas ruled that "an identified source and purpose are all that is required for a valid appropriation."
nytimes
However, Justices Samuel Alito and Neil Gorsuch dissented from the ruling, arguing that it "upholds a novel statutory scheme under which the powerful [CFPB] may bankroll its own agenda without any congressional control or oversight."
FOX News
The CFPB was first sued in 2018. A lower court ruled in its favor after it amended its ban on loan providers withdrawing funds from customers with insufficient balances. However, an appeals court later ruled the agency's funding mechanism illegal.
NBC
In 2022, the CFPB, which was founded in 2008, withdrew about $641.5M of its then-applicable $734M limit from the Federal Reserve.
CBS News

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

SCOTUS has upheld the CFPB's congressionally-appointed authority to protect Americans from predatory financial companies. This ruling, based on historical precedent, allows the consumer watchdog to continue its legacy of handling millions of complaints and providing billions of dollars in relief to the American people.

U.S. Consumer Financial Protection Bureau

Narrative B

Unfortunately, this ruling is in line with the Constitution, but that means it's up to Congress to make a change. Just because the CFPB is allowed to fund itself via the Federal Reserve doesn't mean it should. By handing virtually all of its Constitutional budgetary powers to the executive branch, Congress has allowed these agencies to become bloated and unregulated.