The U.S. Supreme Court ruled last week the funding for the Consumer Financial Protection Bureau is constitutionally valid.
After hearing a challenge from the U.S. Fifth Circuit Court of Appeals to the funding of the agency, the court handed down a 7-2 decision to affirm its constitutionality.
In the majority opinion of the court, Justice Clearance Thomas wrote the “funding mechanism” complied with the Appropriations Clause.
“The statute that authorizes the Bureau to draw money from the combined earnings of the Federal Reserve System to carry out its duties satisfies the Appropriations Clause. Accordingly, we reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion,” Thomas wrote.
The Dodd-Frank Act Wall Street Reform and Consumer Protection Act passed by Congress in 2010 created the CFPB. It was in reaction to the 2008 financial crisis.
“Congress charged the Bureau with enforcing consumer financial protection laws to ensure ‘that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive,’” Thomas wrote.
The agency’s enforcement has led to nearly $5 billion in penalties.
After the decision, CFPB Director Rohit Chopra said the agency will step up enforcement.
“The Court’s ruling makes clear the CFPB is here to stay,” Chopra said. “Here’s what will happen next. First, the CFPB will be able to forge ahead with our law enforcement work. During the pendency of this Supreme Court case, a number of the CFPB’s enforcement actions were put on pause.”
