Supreme Court lets CFPB funding stand

The Supreme Court on Thursday rejected a challenge to the constitutionality of the structure used to fund the Consumer Financial Protection Bureau, the federal agency tasked with enforcing consumer finance laws. By a vote of 7-2, the justices reversed a decision by a federal appeals court in Louisiana, which had ruled that the agency’s funding violates the Constitution because it comes from the Federal Reserve rather than through the congressional appropriations process.

Justice Clarence Thomas wrote for the majority, in a decision that relied heavily on both the text of the Constitution and early English and U.S. history.

Justice Samuel Alito dissented, in an opinion joined by Justice Neil Gorsuch. He offered a dueling interpretation of history that he suggested, leads to the conclusion that the CFPB’s funding scheme “blatantly attempts to circumvent the Constitution.”

The case was one of several on the court’s docket this term involving the division of authority between the three branches of government, as well as the power of administrative agencies. It began as a challenge by two industry groups to a “payday lending” rule that the agency issued in 2017. A three-judge panel of the U.S. Court of Appeals for the 5th Circuit rejected their argument that the rule violated the federal laws governing administrative agencies.