Statement: Supreme Court decision upholds constitutionality of CFPB’s funding mechanism

Agency’s funding meets requirements of U.S. Constitution’s Appropriations Clause

WASHINGTON — The U.S. Supreme Court published its opinion on Thursday for Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America (CFSA). This 7-2 decision reaffirms the constitutionality of the CFPB’s funding. 

CFSA, representing the payday lending industry, contested the CFPB’s payday lending regulations on the grounds that Congress authorized continuous funding for the CFPB from the Federal Reserve, instead of through annual appropriations. However, as Solicitor General Elizabeth Prelogar, appealing on behalf of the CFPB, pointed out during oral arguments last October, the Constitution’s Appropriations Clause simply requires Congress to authorize, by law, any federal expenditures and identify a funding source and purpose. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which established the CFPB, authorized continuous, annually capped funding for the agency derived from the Federal Reserve System’s earnings (see SEC. 1017). Notably, the Constitution only imposes specific limitations on appropriations for raising and supporting armies, which are limited to two years. In practice, nearly two-thirds of annual federal spending does not rely on annual appropriations, and Congress retains the power to change or end its prior authorizations. Congress has also historically authorized funding from sources beyond taxation and government borrowing. Such dependable funding has enabled the CFPB to recover a remarkable $19 billion for consumers.

In response to the decision, U.S. PIRG’s Consumer Campaign Director Mike Litt released the following statement:

“It was hard to imagine the Supreme Court’s decision going any other way because it’s clear in the Constitution’s Appropriations Clause that Congress has the power to fund the CFPB the way it did. 

“But all Americans should still breathe a sigh of relief now that the constitutionality of the CFPB’s funding is a settled matter. The CFPB extending its nearly 13-year run of protecting consumers no longer hangs in the balance.

“That said, we know  those who oppose the CFPB and its work will keep attacking this crucial agency. Congress must reject efforts to change the CFPB’s reliable and constitutional source of funding, which has enabled it to return $19 billion to consumers.”