The Fifth U.S. Circuit Court of Appeals ruled the Consumer Financial Protection Bureau’s funding mechanism is unconstitutional. The Court also vacated the CFPB’s 2017 Payday Lending Rule.
The CFPB is funded through the Federal Reserve and not through the Congressional appropriations process. The Fifth Circuit ruled this structure violates the Constitution’s doctrine of separation of powers. In the opinion, the agency is described as double insulated: first, insulted from appropriations review and second, the agency’s self-determined funding budget is drawn from the Federal Reserve, which itself is outside the appropriations process. This double insulation provides unhindered authority.
The Fifth Circuit invalidated the remaining portions of the Payday Lending Rule. The invalidation of the rule was a result of the CFPB using unconstitutionally granted funds to promulgate it. Ultimately, the Court determined the unconstitutional funding of the CPFB inflicted harm.
To view the full details of the Fifth Circuit decision, please visit the links below.
Links:
21-50826-CV0.pdf (uscourts.gov)
Appeals court finds funding of CFPB unconstitutional | NAFCU