Today, AFSA, with several other trade associations, submitted an amicus brief to the U.S. Supreme Court in Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America (CFSA).
The brief argues in favor of CFSA, noting that the CFPB’s funding structure, which is free from congressional oversight and budgetary process, is unconstitutional.
The case began in October 2017 with a challenge to a rule governing the payday lending industry that barred lenders from seeking additional payments from borrowers’ bank accounts after two consecutive failed attempts. CFPB v. CFSA challenges the Bureau’s authority to make such a rule by calling into question the constitutionality of the Bureau’s unique, “double insulated” funding process.
A federal appeals court ruled in October that the funding mechanism for the CFPB violates the Constitution. The Biden administration, sought an opinion from the Supreme Court, noting that allowing the lower court’s decision to stand could raise “grave concerns” for “the entire financial industry.”
The amicus argues that the Bureau enjoys a unique funding structure, separate from the congressional budget process, noting that while other agencies draw funding from other entities (Office of the Comptroller of the Currency, Federal Deposit Insurance Commission), none combine that autonomy with the vast, sweeping authority given to the Bureau. Agencies that are market regulators and thus easy comparisons to the Bureau, like the Federal Trade Commission, which shares some regulatory responsibility with the CFPB, are funded by Congress and accountable to the people. The Bureau, on the other hand, is a legislature, prosecutor and court.
The amicus suggests that the Court sever the funding mechanism and stay that decision until Congress has time “to authorize temporary funding or fix the constitutional defect.”
The case is likely to be argued this Fall with a decision coming next summer.
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