The Supreme Court announced Monday it would take up a case challenging the Consumer Financial Protection Bureau’s (CFPB) funding mechanism on constitutional grounds.
On Oct. 19, 2022, the U.S. Court of Appeals for the 5th Circuit ruled that funding the CFPB through the Federal Reserve violates the Constitution’s Appropriations Clause, which gives Congress the “power of the purse” in appropriating government funds. The CFPB filed a petition for a writ of certiorari on Nov. 14, 2022, which the Supreme Court granted Monday morning.
Federal regulators on Tuesday ordered Wells Fargo Bank to pay a $1.7 billion civil penalty and more than $2 billion in compensation to customers for what they say was “illegal activity affecting over 16 million consumer accounts.”
The Consumer Financial Protection Bureau said Wells Fargo “repeatedly misapplied loan payments, wrongfully foreclosed on homes and illegally repossessed vehicles, incorrectly assessed fees and interest, charged surprise overdraft fees,” among other things.
On Wednesday, a federal appeals court determined that the Consumer Financial Protection Bureau (CFPB)’s mechanism for funding is unconstitutional.
Politico reports that the three-judge panel of the U.S. 5th Circuit Court of Appeals ultimately made the ruling based on the fact that the CFPB receives its funding through the Federal Reserve, rather than through legislation from Congress, thus violating the separation of powers in the Constitution dictating that Congress controls the government’s purse strings.
Republican senators claimed in a Monday letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra that he has returned the federal agency to its “lawless and unaccountable” Obama-era “roots.”
Led by Pennsylvania Sen. Pat Toomey, the 12 senators are taking aim at Chopra’s alleged “abuses of power” that are a “serious concern.” Chopra should “reverse course” and ensure the CFPB “stay[s] within the boundaries of law,” the senators wrote.