Supreme Court’s Skepticism: Implications for the Consumer Bureau Challenge

The Supreme Court recently held a hearing on a pivotal case that questions the constitutionality of the Consumer Financial Protection Bureau (CFPB), an agency established during the Obama era. In this article, we delve into the key arguments and implications surrounding the Supreme Court’s skepticism regarding the challenge to the Consumer Bureau.


Supreme Court skeptical of challenge to consumer bureau - Los Angeles Times

The CFPB, tasked with safeguarding borrowers from deceptive loans, is unique in its funding mechanism. Rather than relying on annual appropriations from Congress, the agency is funded through fees collected by the Federal Reserve. This funding model is at the center of the legal dispute.

Originalist Argument: A Historical Perspective

How Determinate is Originalism in Practice?

During the hearing, U.S. Solicitor General Elizabeth Prelogar presented a compelling "originalist" argument. She drew on the history and text of the Constitution to emphasize that since the nation’s founding, Congress has created various agencies funded by fees, not annual appropriations. Agencies like the Customs Service, the National Mint, the Post Office, and the Patent Office have all followed this historical practice. According to Prelogar, the CFPB’s appropriation fits squarely within this established practice.

The 5th Circuit’s Ruling

Earlier this year, the conservative 5th Circuit Court of Appeals ruled that the CFPB was unconstitutional due to the absence of a congressional appropriation. However, Prelogar argued that this has never been a constitutional requirement, a sentiment echoed by most of the Supreme Court Justices.

Justice Elena Kagan strongly criticized the 5th Circuit’s argument, asserting that it contradicted centuries of historical precedent. She stated, "You are flying in the face of 250 years of history," addressing Washington attorney Noel Francisco, who represented the payday lenders challenging the agency.

Perpetual Funding and Congressional Oversight

Challenge to consumer watchdog gets a frosty reception at the Supreme Court

Another point of contention raised by the challengers was the claim that the CFPB’s funding is "perpetual" and unchecked by Congress. Justice Brett M. Kavanaugh dismissed this notion, emphasizing that Congress holds the power to change the agency’s funding mechanism at any time. He argued, "Congress could change this tomorrow. There’s nothing perpetual or permanent about this."

Supreme Court’s Leanings

During the two-hour argument, it became apparent that only Justices Samuel A. Alito Jr. and Neil M. Gorsuch seemed inclined to vote in favor of striking down the agency. This skepticism from the Court suggests that the conservative-leaning Court may not be as poised to abolish the CFPB as some progressives and liberals had feared in recent weeks.

Reactions and Implications

Progressives and liberals had voiced concerns that the conservative Supreme Court might dismantle an agency dedicated to protecting ordinary Americans and their finances. However, Tuesday’s hearing seemed to ease these concerns.

Elyse Hicks, consumer policy counsel at Americans for Financial Reform, stated, "Today was a bad day for predatory payday lenders and the Wall Street lobby groups that lent their names to some very ridiculous claims. None of their legal arguments passed the red-face test, and even the questions from the conservative justices reflected that reality."


Justices voice doubts about challenge to consumer protection agency funding - POLITICO

The Supreme Court’s skepticism regarding the challenge to the Consumer Bureau highlights the intricate interplay between constitutional principles and practical considerations. As the Court weighs the constitutionality of the CFPB’s funding mechanism, it holds the potential to shape the future of financial consumer protection in the United States.

Stay tuned for the Court’s decision, which will undoubtedly carry significant implications for both the agency and consumers across the nation.

Disclaimer: This article is based on the information available at the time of writing and does not reflect the final decision of the Supreme Court.

Relevant Topics for Further Exploration

Will the Supreme Court challenge the Consumer Financial Protection Bureau?

In a significant development on Tuesday, October 2, 2023, a majority of Supreme Court justices appeared highly skeptical of a far-reaching challenge to the Consumer Financial Protection Bureau (CFPB). This challenge, if successful, could potentially undermine the very existence of the watchdog agency, which was established by Congress a dozen years ago.

The Consumer Financial Protection Bureau, created to safeguard consumers from deceptive financial practices, now finds itself at the center of a constitutional debate. As the Court deliberates, questions arise about the future of this vital institution and its role in protecting American consumers.

In this article, we explore the key arguments and implications surrounding the Supreme Court’s stance on the challenge to the Consumer Bureau, shedding light on the potential impact of this crucial legal battle.

Is the Consumer Financial Protection Bureau constitutional?

In a recent Supreme Court argument, a majority of justices appeared inclined to dismiss a challenge to the constitutionality of the Consumer Financial Protection Bureau (CFPB). This agency, established during the Obama administration, was created with the aim of curbing abuses by banks and other financial services providers.

The question of the CFPB’s constitutionality has been a subject of debate, and as the Supreme Court deliberates, it raises fundamental questions about the agency’s legal standing and its role in regulating the financial industry.

In this article, we delve into the key arguments and considerations surrounding the constitutional challenge to the Consumer Financial Protection Bureau, shedding light on the potential implications of this pivotal legal case.

Will the Supreme Court preserve CFPB’s work against a Conservative challenge?

In a recent hearing, the Supreme Court appeared poised to defend the accomplishments of the Consumer Financial Protection Bureau (CFPB) against a challenge led by conservatives. The CFPB’s case is among several significant challenges to federal regulatory agencies on the court’s docket this term, signaling a potentially pivotal moment for agencies that have faced scrutiny and calls for operational limitations over the past decade.

As the Supreme Court deliberates, it raises questions about the future of the CFPB and its mission to protect consumers from financial abuses, highlighting a broader debate over the powers and constraints of federal regulatory bodies in the United States.

What is Consumer Financial Protection Bureau v Community Financial Services Association of America?

The case at hand is identified as Consumer Financial Protection Bureau v. Community Financial Services Association of America. In this legal dispute, the justices of the Supreme Court are currently considering a challenge to a lower-court ruling. The lower court had previously declared the funding mechanism for the Consumer Financial Protection Bureau (CFPB) as unconstitutional.

This case represents a pivotal legal battle that questions the constitutionality of the CFPB’s funding structure, with far-reaching implications for the agency’s role in safeguarding consumers from financial misconduct.

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