The U.S.
Supreme Court has ruled 7-2 to uphold the funding mechanism for a contentious federal financial regulatory agency, rejecting arguments that using the Federal Reserve System (Fed) for funding the Consumer Financial Protection Bureau (CFPB) unlawfully bypasses Congress’ power of the purse.
Conservative Justice Clarence Thomas wrote for the majority, stating that “appropriations need only identify a source of public funds and authorize the expenditure of those funds for designated purposes to satisfy the Appropriations Clause.
Two lender trade associations challenged the CFPB, which was established in 2011 following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The aim of the legislation was to shield the CFPB from political pressure during annual appropriations in Congress.
However, conservatives argued that allowing the CFPB to receive up to $600 million a year from the Fed made the agency unconstitutionally unaccountable to Americans’ elected representatives.
Had the payday lenders succeeded, the court could have invalidated every action the agency had taken since its inception.
The lending groups first challenged the CFPB in 2017 regarding a rule restricting illegal debits from bank accounts.
The conservative Fifth Circuit Court of Appeals had previously sided with the payday lenders.
The two justices who dissented were Samuel Alito and Neil Gorsuch, with Alito arguing that the decision “upholds a novel statutory scheme under which the powerful Consumer Financial Protection Bureau (CFPB) may bankroll its own agenda without any congressional control or oversight.
During his term, then-President Donald Trump repeatedly attempted to undermine the CFPB’s power and functions.
President Joe Biden has sought to strengthen the agency, stating that “CFBP has worked to protect consumers from abusive practices by lenders, servicers, and special interests, and has lowered costs for hardworking families by going after junk fees.
More than 130 GOP lawmakers, as well as House Speaker John Boehner (R-Ohio), supported the lenders.
However, the majority found that based on the “Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification,” CFPB’s funding structure was permissible.
In 2020, the court ruled 5-4 that the leadership structure of the CFPB was unconstitutional but stopped short of abolishing the agency outright.
Also this week, the high court overturned a lower court’s ruling that had allowed a Florida woman to sue a Maine hotel for failing to disclose accessible features on its reservation website.
The woman did not intend to make a reservation at the hotel in question.
Deborah Laufer is visually impaired and uses a wheelchair; the justices unanimously reversed the lower court’s decision to revive her lawsuit against Acheson Hotels LLC.
The justices found the case to be moot, so they dismissed it.
Laufer, who described herself as a “tester” of hotels’ ADA compliance, asserted that the corporation was in breach of a federal regulation mandating the inclusion of accessibility information in reservation systems, as per the Americans with Disabilities Act, a seminal civil rights statute passed in 1990.
Some conservative and liberal justices appeared doubtful that Laufer had standing to sue during the case’s oral arguments in October.