Consumer Financial Protection Bureau Director Rohit Chopra

Consumer Financial Protection Bureau Director Rohit Chopra testifies during a U.S. Senate hearing in Washington, D.C. on November 30, 2023.

(Photo: Tom Williams/CQ-Roll Call, Inc. via Getty Images)

'Consumers Win' as Supreme Court Rejects 'Radical' Attack on CFPB

Amid celebrations over the ruling, one legal expert warned, "Don't confuse 'SCOTUS slaps down a wackadoodle 5th Circuit decision' with 'SCOTUS is more moderate than its critics claim.'"

Legal experts and progressive advocates on Thursday applauded the U.S. Supreme Court's 7-2 decision to uphold the Consumer Financial Protection Bureau's funding mechanism but also cautioned against praising the far-right justices.

While Justices Samuel Alito and Neil Gorsuch dissented, fellow right-winger Clarence Thomas penned the opinion in CFPB v. Consumer Financial Services Association of America, joined by the other three conservatives and three liberals—two of whom wrote concurring opinions.

In the majority opinion, the court held that "Congress' statutory authorization allowing the bureau to draw money from the earnings of the Federal Reserve System to carry out the bureau's duties satisfies the appropriations clause" of the U.S. Constitution.

In a statement welcoming the ruling, the CFPB said that "for years, lawbreaking companies and Wall Street lobbyists have been scheming to defund essential consumer protection enforcement. The Supreme Court has rejected their radical theory that would have devastated the American financial markets. The court repudiated the arguments of the payday loan lobby and made it clear that the CFPB is here to stay."

The bureau continued:

Congress created the CFPB to be the primary federal watchdog protecting consumers from predatory and abusive practices in the financial sector. Since the CFPB opened its doors in 2011, it has delivered more than $20 billion in consumer relief to hundreds of millions of consumers and has handled more than 4 million consumer complaints.

Today's decision is a resounding victory for American families and honest businesses alike, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent, and competitive.

This ruling upholds the fact that the CFPB's funding structure is not novel or unusual, but in fact an essential part of the nation's financial regulatory system, providing stability and continuity for the agencies and the system as a whole. As we have done since our inception, the CFPB will continue carrying out the vital consumer protection work Congress charged us to perform for the American people.

The CFPB was far from alone in cheering the court's decision in the case, which Demand Progress corporate power director Emily Peterson-Cassin said "was nothing more than a cynical attempt by payday lenders to sabotage the CFPB, so they could continue to prey on American consumers."

"This case was simple: the Constitution requires Congress to pass a law authorizing funds for the CFPB, and Congress did that," she explained. "Today's decision will preserve stability in the financial markets and ensure the CFPB can continue its important work protecting the American people."

U.S. Sen. Elizabeth Warren (D-Mass.), a key architect of the agency, agreed that "this is a big win for working people."

Devon Ombres, senior director for courts and legal policy at the Center for American Progress, also celebrated a ruling he said would allow the agency "to continue fighting to protect the American people from corporate bad actors, fraudsters, and scammers."

While praising the decision, Ombres pointed out that "the justices reversed yet another extreme opinion from the 5th Circuit Court of Appeals that could have placed the entire financial regulatory system at risk and roiled financial markets."

Accountable.US similarly declared that in this case, "consumers win," and blasted the far-right appellate court.

"The reason the Consumer Financial Protection Bureau is so effective at making wronged consumers whole is because of its independence, which is why shady industry CEOs and lawmakers in their pocket wanted to jam up the agency's funding with politics and lobbyist money," said Accountable.US president Caroline Ciccone.

"Among the biggest losers in this decision is the conservative 5th Circuit that gleefully advanced this lawsuit from predatory lenders and has sided with industry over consumers in a number of cases citing the same baseless arguments," Ciccone added. "The 5th Circuit's credibility continues to suffer as it willingly plays along with industry judge and venue shopping schemes that corrupt our judicial system."

Legal experts took aim at not only the appellate court but also right-wingers on the country's top court. Slate's Mark Joseph Stern said that "today's decision is a HUGE victory for the CFPB and a major defeat not only for the corporate lobby, but for the 5th Circuit, which embraced a theory so radically anti-historical and atextual that JUSTICE THOMAS wrote the opinion emphatically reversing it."

"Today's CFPB decision has a lot in common with the last Obamacare case: The 5th Circuit went so far off the tracks that it got a spanking in the form [of] a vehement 7-2 reversal by SCOTUS, with even Justice Thomas concluding that the 5th Circuit's nihilistic arsonists lost the plot," he added. "That said, no one should interpret today's CFPB decision as proof that the Supreme Court is 'moderating' or 'compromising' or 'shifting to the center.' Not at all. The decision is evidence of how totally lawless the 5th Circuit has become—because this case shouldn't even exist!"

CNN Supreme Court analyst and University of Texas School of Law professor Steve Vladeck warned: "Don't confuse 'SCOTUS slaps down a wackadoodle 5th Circuit decision' with 'SCOTUS is more moderate than its critics claim.' 'Not as radical as the 5th Circuit' is not the same as 'moderate.'"

Supporters of Thursday's decision also warned that the fight isn't over. Groundwork Collaborative chief economist Rakeen Mabud said that "today's Supreme Court decision was decisively in favor of federal oversight on consumer protection, but we know that big business and their lobbyists won't stop trying to dismantle an agency dedicated to protecting everyday Americans."

"This makes it all the more important that the Consumer Financial Protection Bureau continues its critical work," Mabud added of an agency that has recently cracked down on credit card and overdraft fees.

U.S. PIRG consumer campaign director Mike Litt suggested that "all Americans should still breathe a sigh of relief now that the constitutionality of the CFPB's funding is a settled matter. The CFPB extending its nearly 13-year run of protecting consumers no longer hangs in the balance."

"That said, we know those who oppose the CFPB and its work will keep attacking this crucial agency," he added. "Congress must reject efforts to change the CFPB's reliable and constitutional source of funding, which has enabled it to return $19 billion to consumers."

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