Supreme Court Announces It Will Hear Republican Challenge to Obama-Era Federal Agency


The Supreme Court said Monday it will take up a Republican-led challenge to the Consumer Financial Protection Bureau, a case that could threaten how the consumer watchdog agency functions. It is the second time in three years that the justices will be examining the federal agency, which was created in the wake of the 2008 financial crisis.

The case will not be heard before October — when the court begins its next term.

Late last year, a federal appeals court — the U.S. Court of Appeals for the 5th Circuit — ruled that the agency’s funding structure is unconstitutional, threatening its ability to function. The Biden administration asked the high court to review that decision, which it has now agreed to do.

The administration said the lower court’s ruling “calls into question virtually every action the CFPB has taken” since its creation. The decision “threatens to inflict immense legal and practical harms on the CFPB, consumers and the nation’s financial sector,” the administration said.

Since the bureau was created more than a decade ago by the Dodd-Frank Act, it has varied in its aggressiveness. During the Obama administration, it used its muscle to collect fines from banks and credit card companies; during the Trump administration, it scaled back enforcement actions. Republicans have argued that the agency has unchecked power.

US Missionaries Slaughtered in Haiti, Ambushed by 3 Truck Loads of Gang Members - Biden Silent So Far

The case the justices agreed to hear centers on the agency’s funding. Unlike a majority of agencies, the CFPB does not get its funding from the annual budget process in Congress. Instead, it is funded directly by the Federal Reserve. The agency’s budget is capped at 12 percent of the total operating expenses of the Federal Reserve System. In the 2022 fiscal year, the agency received about $640 million.

The case the justices will hear began when two associations sued over the agency’s Payday Lending Rule. They argued in part that the agency’s funding structure violated the Constitution, improperly insulating the agency from congressional supervision. A trial court ruled against the associations, but the appeals court agreed the funding structure was unconstitutional. Other courts that had previously looked at the agency’s funding structure found no issue.

In urging the justices to take the case, a group of 16 mostly Republican-led states called the CFPB “a failed experiment in administrative governance.”

Should the Supreme Court rule against this federal bureau?

Just three years ago, in 2020, the high court dealt with a different challenge to the agency. That case involved the agency’s structure. The justices ultimately ruled that Congress had improperly insulated the head of the bureau from removal. The justices said the agency could continue to operate but that its director had to be removable by the president at will.

The CFPB was the brainchild of Democratic Sen. Elizabeth Warren of Massachusetts.

The Western Journal has reviewed this Associated Press story and may have altered it prior to publication to ensure that it meets our editorial standards.

Truth and Accuracy

Submit a Correction →

We are committed to truth and accuracy in all of our journalism. Read our editorial standards.

, , , , , , ,
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Their teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. They provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands. Photo credit: @AP on Twitter
The Associated Press was the first private sector organization in the U.S. to operate on a national scale. Over the past 170 years, they have been first to inform the world of many of history's most important moments, from the assassination of Abraham Lincoln and the bombing of Pearl Harbor to the fall of the Shah of Iran and the death of Pope John Paul.

Today, they operate in 263 locations in more than 100 countries relaying breaking news, covering war and conflict and producing enterprise reports that tell the world's stories.
New York City