Democrats cheer after Supreme Court rejects challenge to consumer bureau

Democrats and financial industry commentators celebrated Wednesday after the Supreme Court rejected a challenge to the Consumer Financial Protection Bureau’s (CFPB) funding structure.

“The Supreme Court of the United States is following the law, and the CFPB is here to stay,” Sen. Elizabeth Warren (D-Mass.) said from the steps of the Supreme Court.

Warren was one of the chief architects of the CFPB, which was created through the Dodd-Frank Wall Street Reform Act to enforce consumer protection laws and crack down on predatory lending. Since then, he announced, the CFPB has recovered $20 billion to consumers.

“When you have a government agency that does such a good job of protecting consumers, a lot of banks, payday lenders and a lot of Republicans follow suit and try to shut it down,” she continued.

Some Republican lawmakers have argued that the CFPB’s funding structure is unconstitutional because it is not directly funded through the appropriations process. Other banking regulators, including the Federal Reserve, are funded by fees and fines paid by the companies they regulate.

However, in a 7-2 decision, the Supreme Court rejected a challenge by two financial industry groups that argued that the CFPB was in violation of Congress’ spending authority because it receives funding from the Federal Reserve. did.

Justices Samuel Alito and Neil Gorsuch voted against it. Justice Clarence Thomas wrote the majority opinion for the Biden administration.

“An appropriation under the Appropriations Clause is simply a law authorizing expenditures for specified purposes from specified public funds,” Thomas wrote. “The statutes that fund the Department meet these requirements. Accordingly, we conclude that the Department’s funding mechanism does not violate the Appropriations Clause.”

After the decision was made, House Financial Services Committee Chairman Patrick McHenry, RN.C., vowed that “Republicans will continue the fight to rein in the corrupt CFPB.”

He also urged the House to pass Rep. Andy Barr’s (R-Ky.) CFPB Transparency and Accountability Reform Act. The bill would remove the agency from the Fed system and make it subject to appropriations procedures.

“It is past time for the CFPB to be accountable to the American people through their elected representatives,” McHenry said.

The House Financial Services Committee considered a series of bills Wednesday, including the Loan Transparency Act. restrain authority of the bureau to classify certain acts as abuse.

Rob Nichols, president and CEO of the American Bankers Association, said the powerful lobbying group “continues to press Congress to establish greater accountability for the bank.”

“Only by putting limits on this rogue regulator can consumers be truly protected and banks continue to provide the financial products consumers want and need,” Nichols said. .

But even if a bill targeting the CFPB were to pass the House, the agency would be crippled once it reaches the Democratic-controlled Senate.

Senate Banking Committee Chairman Sherrod Brown (D-Ohio) blamed “powerful corporate special interests” who have “been trying to eviscerate government agencies for more than a decade.”

“Wall Street tried and failed to use the courts to take down the Consumer Financial Protection Bureau,” Brown said.

“Today’s decision protects workers and consumers who don’t have well-paid lobbyists or lawyers to fight for them. We created the CFPB to represent their voices. We will continue to ensure that this agency fulfills its mission of protecting consumers from Wall Street’s greed.”

Cassandra Gould, pastor and senior strategist at Faith in Action, who spoke alongside Warren in front of the Supreme Court, celebrated the decision.

“On behalf of the least of today’s people, we at Faith in Action want to make sure that the young, the old, the vulnerable, and those who need more food on the table are being harmed in part because of the CFPB. “I am grateful that I will not be accused of being a financial predator,” Gould said, “unharmed and able to do his job.”

Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending, said the decision allows the CFPB to “continue its work as a watchdog protecting Americans’ wallets from predatory financial companies.”

“Even with this decision, some industry players continue to file lawsuits and lobby to maintain illegal financial discrimination, billions of dollars in illegal junk fees, and other exploitative practices. , we must continue to fight to protect consumer watchdogs in the courts and Congress,” Chabrier said.

President Biden has made tackling junk fees and cracking down on corporate price gouging a priority in his first term, including enacting a rule capping credit card late fees on the largest issuers at $8. It includes authorizing the CFPB to approve the bill in March.

Mr. Biden also faces a tough re-election race against former President Trump, who is seen as the likely Republican candidate, but his handling of the economy is more popular with voters than Mr. Biden.

The president drew a line between himself and his opponents, “ripping Republicans apart in Congress and in states across the country.” [who] They have worked with special interests who want to continue to tear families apart. ”

“In the face of years of attacks from extreme Republicans and special interests, the court has made clear that the CFPB’s funding authority is constitutional and its strong record in consumer protection will not be reversed.”