The Supreme Court Must Protect the CFPB

In response to the news that the U.S. Supreme Court will take up Community Financial Services Association of America v. Consumer Financial Protection Bureau, a case challenging the constitutionality of the CFPB, the American Economic Liberties Project released the following statement.

“The Fifth Circuit’s previous opinion finding the CFPB’s funding mechanism unconstitutional is a direct attack on the nation’s economy,” said Morgan Harper, Director of Policy and Advocacy at the American Economic Liberties Project. “Now that it has taken up the case, SCOTUS must move swiftly to overturn this dangerous opinion that could prevent financial regulators, including the Federal Reserve, from doing their jobs to protect American businesses and consumers.”

Congress established the CFPB in the wake of the 2008 financial crisis, tasking it with protecting Americans from abuse in the consumer financial industry. In 2022, the Fifth Circuit Court of Appeals struck down a CFPB rule protecting borrowers from abusive payday lenders, citing its unconstitutional funding structure, a structure it shares with the Federal Reserve and numerous other federal agencies. If not overturned by the Supreme Court, the ruling would sow chaos in financial markets and void countless actions taken by the CFPB to fight wrongdoing by powerful corporate giants like big banks, credit card firms, and credit reporting companies, which have so far resulted in nearly $14 billion returned to Americans.

By taking up Community Financial Services Association of America v. CFPB, the Supreme Court has the opportunity to overturn the Fifth Circuit ruling and protect Americans from its disastrous consequences. Beyond the CFPB, the Fifth Circuit’s current ruling threatens the constitutionality of the Federal Reserve – the linchpin of the entire global economy – as well as other key financial agencies, including the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Federal Housing Finance Agency, the Farm Credit Administration, and the Office of Financial Research.

Furthermore, the Fifth Circuit ruling could make nearly two-thirds of federal spending illegal, threatening Medicare, Medicaid, Social Security, the Affordable Care Act, unemployment benefits, and child nutrition assistance, among others – setting the stage for large-scale destruction of critical parts of the U.S. state relied upon by the American people.