Court of Appeal finds financing CFPB unconstitutional

“Congress’ decision to relinquish its powers of credit under the Constitution, i.e. to relinquish its power over the stock market to the Bureau, violates the Constitution’s structural separation of powers,” the judges wrote.

The appeals court ruling marked the latest victory for the financial industry, which has fought for years in Congress and the courts to water down the CFPB’s reach and limit its ability to oversee financial services. Republican lawmakers have also worked for years to stifle the CFPB and revamp its structure, arguing that the agency has no responsibility.

“Even among self-funded agencies, the Bureau is unique,” Judge Cory Wilson wrote Wednesday. “The Agency’s perpetual, self-governing, doubly isolated funding structure is a significant step beyond that of the other agencies on offer.”

The CFPB declined to say Wednesday whether it would appeal the decision to the full 5th Circuit. CFPB spokesman Sam Gilford said, “There is nothing new or unusual about Congress’ decision to fund the CFPB outside of annual spending accounts.”

“Other federal financial regulators and the entire Federal Reserve System are funded that way, and programs like Medicare and Social Security are funded outside of the annual credit process,” Gilford added. “The CFPB will continue to do its vital work to enforce the laws of the nation and protect American consumers.”

The Supreme Court ruled in 2020 that another provision in the agency’s structure — a single director who could be fired only for good reason, rather than at will, by the president — violated the separation of powers. powers of the Constitution.

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