Arlington, VA — Today, the Supreme Court has ruled on Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America, finding in a 7-2 decision that the CFPB funding structure is constitutional. The decision comes despite the solid case made against the CFPB by the 5th Circuit Court of Appeals, which earlier ruled against the CFPB. We at the American Consumer Institute (ACI) regret to see the court dismiss credible concerns that drew attention to the Bureau’s “uniquely unconstitutional” funding” structure.

Unlike other agencies, the CFPB is not funded through annual budgetary bills which must be passed by Congress, but instead through direct allocation of funds by the Federal Reserve. As such, the CFPB is not subject to the discretionary authority of Congress, in direct violation of the constitution’s appropriations clause, stating, “no money shall be drawn from the Treasury but in consequence of appropriations made by law.”

Even indirect authority from Congress is obfuscated since the Bureau is not even subject to appropriations committees, which could subject the CFPB to nonannual funding. Instead, the Federal Reserve issues all funds directly via a letter request from the Bureau’s director. As such, the Congressional duty to appropriate funds is totally thwarted, leaving the Bureau indisposed to the will of the people’s representatives.

It is for these reasons that the 5th Circuit called the CFPB “uniquely unconstitutional,” and in need of reform. The decision to allow a federal agency to operate outside the purview of our democratic representatives creates a dangerous precedent. Such an agency is not subject to the people in the same way agencies that require annual budgets or committee oversight are. It is a shame the Supreme Court was unwilling to see the glaring problems with this system.