ABA, associations support challenge to CFPB funding structure

The American Bankers Association on Monday joined the U.S. Chamber of Commerce and other associations in filing an amicus brief with the U.S. Supreme Court in favor of striking down the Consumer Financial Protection Bureau’s funding structure, arguing that the current funding mechanism shields it from congressional oversight.

The CFPB is unique among federal agencies in that its funding comes directly from the Federal Reserve based on a request from the bureau’s director. The Fifth Circuit Court of Appeals last year ruled that such a funding structure was unconstitutional because Congress ceded direct control over the agency’s budget by insulating it from annual appropriations, and that it ceded indirect control by insulating the agency’s source from the appropriations process (CFPB v. Community Financial Services Association of America). The Supreme Court in February announced it would review the decision. Since then, the Second Circuit Court of Appeals has upheld the constitutionality of the CFPB’s funding in a separate case (CFPB v. the Law Offices of Crystal Moroney), resulting in conflicting court rulings.

In their brief, the associations urged the high court to uphold the Fifth Circuit’s ruling finding the funding structure illegal. “No other agency—let alone one with the vast authority of the bureau—has funding so insulated from congressional oversight and the entities and people it regulates,” the groups said. “No other agency’s spending is so disconnected from laws passed by Congress.” They added that a ruling against the CFPB shouldn’t affect other agencies. “Other financial regulators need not and should not be affected by such a decision because they do not enjoy the same level of unprecedented budgetary independence as the bureau,” they said.

On Tuesday, 132 Republican lawmakers in the House and Senate filed a separate amicus brief also asking the Supreme Court to declare the funding structure unconstitutional. “The CFPB ‘is in an entirely different league’ from other entities when it comes to its insulation from Congress … to the point that the CFPB currently operates as ‘a sort of junior-varsity Congress’ setting its own funding levels in perpetuity,” they said.