The US Supreme Court is to issue an opinion on the Consumer Financial Protection Bureau’s (CFPB) funding model after a previous ruling that the model was unconstitutional.
The CFPB has been under scrutiny by lawmakers in recent months over its funding mechanism, which comes from the Federal Reserve rather than Congress, unlike other US regulators. This violated the ‘separation of powers’ clause of the US constitution, according to a ruling in October from the US Court of Appeals.
Rob Nichols, president and CEO of the American Bankers Association (ABA), said in a statement: “[The] announcement that the Supreme Court will consider the constitutionality of the CFPB’s funding is a step toward resolving longstanding questions surrounding the Bureau.
“We have seen the Bureau repeatedly ignore legal boundaries established by Congress. To bolster the CFPB’s accountability, ABA has long advocated for a board or commission structure and for the Bureau to be subject to the appropriations process.
“We hope that the resolution of this case will take heed of these critical issues while ensuring Americans continue to have access to the financial products they want and need, along with the protections they deserve.”
In October, the US Court of Appeals said the agency’s funds should be controlled by Congress. The Biden Administration appealed this, and the Supreme Court will rule on it during its next term, beginning in October 2023.
The CFPB has been funded via the Federal Reserve since its establishment in 2008 following the global financial crisis.