Supreme Court Upholds CFPB Funding Structure 7-2; Thomas Authors, Alito and Gorsuch Dissent

May 16, 2024, 05:45 PM

The U.S. Supreme Court has upheld the constitutionality of the Consumer Financial Protection Bureau's (CFPB) funding structure in a 7-2 decision. Justice Clarence Thomas wrote the majority opinion, which was joined by Chief Justice John Roberts and Justices Stephen Breyer, Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, and Amy Coney Barrett. Justices Samuel Alito and Neil Gorsuch dissented. The ruling reverses a decision by the Fifth Circuit Court of Appeals and confirms that the CFPB's funding mechanism, which allows it to draw money from the Federal Reserve rather than through congressional appropriations, does not violate the Appropriations Clause of the Constitution. The decision is seen as a significant victory for the Biden administration and consumer protection advocates, ensuring that the CFPB can continue its mission of regulating financial institutions and protecting consumers from predatory practices. Since its creation in 2010, the CFPB has returned over $20 billion to consumers. The ruling also highlights a rare alignment of Justice Thomas with the court's liberal justices and underscores the ongoing debate over the balance of power between federal agencies and congressional oversight. The case, CFPB v. Community Financial Services, was a challenge brought by payday lenders and other financial entities. The CFPB, an Obama-era creation largely credited to Senator Elizabeth Warren, has been a key player in protecting Main Street consumers.