CFPBEnforcementPolitics & Money

Supreme Court to hear oral arguments in CFPB constitutionality case this October

The latest challenge to the CFPB’s constitutionality will play out before the justices at the beginning of their next term

The United States Supreme Court released its calendar of oral arguments for its 2023-24 term late last week, and is wasting no time in hearing oral arguments in a case that could decide the fate of the Consumer Financial Protection Burau (CFPB).

The Court will hear oral arguments for Consumer Financial Protection Bureau v. Community Financial Services Association on Oct. 3, the second day of its new session, according to the released calendar as first reported by USSC-dedicated news outlet SCOTUSblog.

Set in motion by a small-dollar lending rule initiated by the Bureau in 2017, the payday lending industry began targeting the rule. Case plaintiffs the Community Financial Services Association of America and Consumer Service Alliance of Texas argued the CFPB’s payday rule was made arbitrarily and capriciously, and exceeded its statutory authority.

The plaintiffs also challenged the CFPB’s structure, its powers granted by Congress and the director’s protections from removal, claiming they were all unconstitutional. In October, the Fifth Circuit Court of Appeals ruled in favor of the plaintiffs, saying that “Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers,” the decision said.

It vacated the small-dollar lending rule in the process, though it did not address the majority of other challenges the trade groups sought to bring to court.

The following month after the Fifth Circuit decision, the Bureau appealed to the USSC, with CFPB lawyers claiming that the Fifth Circuit decision was made in error due to its interpretation of the structure through which the Bureau and its activities are funded.

This past March, the Second Circuit Court of Appeals conflicted with the prior Fifth Circuit ruling, holding that it could find no basis in Supreme Court precedent for its decision and that the Constitution itself does not support the Fifth Circuit ruling declaring the Bureau’s funding source unconstitutional.

The Court agreed to hear arguments in the case in February but denied the CFPB’s request to expedite the case for the Court’s current term. While oral arguments will commence in October, a final ruling by the Court is not expected until early 2024.

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please