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US Supreme Court rejects bid to gut consumer protection bureau


FILE - Signage for the U.S. Consumer Financial Protection Bureau in Washington, Aug. 29, 2020. The CFPB withstood a Supreme Court challenge to the way it is funded on May 16, 2024.
FILE - Signage for the U.S. Consumer Financial Protection Bureau in Washington, Aug. 29, 2020. The CFPB withstood a Supreme Court challenge to the way it is funded on May 16, 2024.

The U.S. Supreme Court ruled on Thursday that the funding mechanism for the Consumer Financial Protection Bureau is constitutional, fending off a conservative attack on the agency.

The vote in the nation's high court was 7-2, with four conservative justices siding with the three liberals and two conservatives dissenting.

The CFPB was created by Congress in the wake of the 2008 global financial crisis and serves as a watchdog over a variety of consumer issues ranging from mortgages to credit cards to student loans.

The plaintiffs in the case — payday lending groups — had argued that the funding structure for the agency was unconstitutional.

The CFPB receives its funding, currently around $600 million a year, from the U.S. Federal Reserve instead of through annual appropriations from Congress.

The case ended up in the Supreme Court after conservative judges on a lower court ruled the funding mechanism violated the appropriations clause of the U.S. Constitution, which gives the power of the purse to Congress.

Justice Clarence Thomas, who wrote the majority opinion, disagreed.

"Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes," Thomas said. "The statute that provides the bureau's funding meets these requirements. We therefore conclude that the bureau's funding mechanism does not violate the Appropriations Clause."

President Joe Biden welcomed the court's ruling, calling it an "unmistakable win for American consumers" and an agency that has "worked to protect consumers from abusive practices by lenders, servicers and special interests."

"In the face of years of attacks from extreme Republicans and special interests, the Court made clear that the CFPB's funding authority is constitutional and that its strong record of consumer protection will not be undone," Biden said in a statement.

The CFPB case was one of three the court heard during its current term that challenge the regulatory authority of federal agencies when it comes to banking, business, industry or the environment.

One of the other cases stems from a requirement that herring fishermen in New England provide space onboard their vessels for observers from the National Marine Fisheries Service, or NMFS.

Several fishing companies complained that they are being effectively forced to pay for the federal observers who are monitoring their operations.

A split appellate court ruled that the NMFS program was authorized under a 1984 Supreme Court ruling known as the "Chevron Doctrine" that says courts should defer to government agencies' interpretation of ambiguous federal laws.

The other case on the docket would curtail the power of the Securities and Exchange Commission to adjudicate violations of federal securities laws.

The Supreme Court will issue its rulings in those cases by the end of June.

The conservative-majority court has previously ruled that the government's key environmental agency cannot issue broad limits on greenhouse gases, sharply curtailing powers of the Biden administration to battle climate change.

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