An appeals court on Wednesday ruled that the Consumer Financial Protection Bureau’s funding mechanism is unconstitutional, in a victory for lenders that have targeted the agency’s structure in a years-long bid to tamp down regulation.
A three-judge panel of the 5th U.S. Circuit Court of Appeals ruled
that the design of the CFPB violated the Constitution because it
receives funding through the Federal Reserve, rather than appropriations
legislation passed by Congress. Democrats established the structure
when they created the CFPB in the 2010 Dodd-Frank law as a way to shield
the bureau from political pressures that could impact its oversight of
the finance industry............“Congress’s decision to abdicate its
appropriations power under the Constitution, i.e., to cede its power of
the purse to the Bureau, violates the Constitution’s structural
separation of powers,” the judges wrote...........The Supreme Court in 2020 ruled that
another provision of the agency’s structure — a single director who
could only be fired for cause, rather than at will, by the president —
violated the Constitution’s separation of powers............To Read More....
