2nd Circuit: The funding structure of the CFPB is not unconstitutional
The Consumer Financial Protection Bureaus independent funding through the Federal Reserve is constitutional, the Second Circuit ruled ahead of a US Supreme Court case challenging the agencys funding.
The unanimous Thursday ruling from a three-judge panel of the US Court of Appeals for the Second Circuit came in a case where a New York debt collection law firm, the Law Offices of Crystal Moroney PC, is attempting to escape a civil subpoena the CFPB issued in June 2017. A lower court ruled in the CFPBs favor in August 2020.
The law firm argued in part that the CFPBs funding through the Fed and outside of the Congressional appropriations process violates the Constitutions Appropriations Clause and nondelegation doctrine. The Second Circuit panel rejected that argument.
The Supreme Court is set to hear arguments in its upcoming October term in the CFPBs appeal of an October 2022 ruling in the US Court of Appeals for the Fifth Circuit that the CFPBs funding violates the Constitution and the agency should be subject to Congressional appropriations.
The Second Circuit said in its Thursday ruling that cannot find any support for the Fifth Circuits ruling on the CFPBs funding in Supreme Court precedent.
Decision
Bloomberg Law