132 Members of Congress Say CFPB Funding Structure Unconstitutional

A group of 132 members of Congress favor challenging the funding structure of the Consumer Financial Protection Bureau (CFPB).

The group filed an amicus curiae brief to the Supreme Court in support of upholding a lower court’s decision that the CFPB’s funding structure is unconstitutional, and that the agency’s funding should be subject to congressional appropriation, the House Financial Services Committee (HFSC) said in a Tuesday (July 11) press release.

The effort was led by HFSC Chairman Patrick McHenry, R-N.C., House Subcommittee on Financial Institutions and Monetary Policy Chairman Andy Barr, R-Ky., House Subcommittee on Oversight and Investigations Chairman Bill Huizenga, R-Mich., and Senate Committee on Banking, Housing and Urban Affairs Ranking Member Tim Scott, R-S.C., the release said.

Their brief said that the CFPB is insulated from Congress by its funding structure and operates as “a sort of junior-varsity Congress” setting its own funding levels.

“Such insulation means that Congress itself is not determining the CFPB’s funding,” the brief said. “The court should affirm the judgment below, which will return the matter of the CFPB’s funding to the normal political and legislative channels, as Article I and the Appropriations Clause require.”

The Supreme Court agreed in February to hear arguments challenging the constitutionality of the funding of the CFPB.

As PYMNTS reported at the time, the case hinges on the financing of the bureau, but would have far-reaching impact on the regulations, fines and authoritative reach of the CFPB.

Last fall, the Biden administration filed the petition on behalf of the CFPB asking the high court to hear the case after the U.S. Court of Appeals decided in October that the CFPB’s funding from the Federal Reserve is unconstitutional.

In the petition, the government states that the “Court of Appeals’ unprecedented understanding of the Appropriations Clause threatens the ability of the CFPB to function and risks severe market disruption.”

In another recent court case, a federal appeals court ruled in March that CFPB funding via the Federal Reserve is constitutional. The unanimous ruling by the U.S. Court of Appeals for the Second Circuit came in a case in which a New York-based collection firm challenged the legality of a CFPB subpoena.

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