The Supreme Court rejected a challenge to the funding mechanism of the Consumer Financial Protection Bureau, with the vote being 7 to 2, with Justice Clarence Thomas writing the majority opinion. The decision was seen as a win for the bureau and its mission to protect consumers from financial misconduct. The challenge aimed to limit the power of independent agencies but was ultimately dismissed by the court.
Had the bureau lost the case, it could have affected all regulations and enforcement actions taken by the agency over its 13 years of existence. The central question in the case revolved around whether the funding mechanism violated the appropriations clause of the Constitution. Justice Thomas concluded that the mechanism was indeed constitutional and met the requirements set forth in the clause. This decision was welcomed by the bureau, which had faced sustained attacks since its establishment.
Critics of the agency, however, saw the ruling as a missed opportunity for the court to limit Congress’s powers and ensure proper oversight of government agencies. Republicans and business groups have long argued that the bureau holds unchecked power, and the court’s decision was seen as maintaining the status quo. The agency is funded through an arrangement where it draws resources from the Federal Reserve system, which does not receive congressional appropriations.
In a concurring opinion, Justice Elena Kagan supported Congress’s decision on how to fund the bureau, citing historical precedent and the effectiveness of the current system. Justice Ketanji Brown Jackson also wrote a concurrence, cautioning against undercutting the decisions made by Congress to address national concerns. However, dissenting Justice Samuel A. Alito argued that the funding mechanism gives the bureau too much financial autonomy and goes against the intentions of the appropriations clause.
The case had previously been ruled on by the U.S. Court of Appeals for the Fifth Circuit, where a three-judge panel found the bureau’s funding method to be unconstitutional. The decision was in conflict with rulings from other courts, further adding to the controversy surrounding the agency’s funding mechanism. The court is expected to rule on other major challenges to agency power in the coming weeks, including issues related to the Chevron doctrine and the constitutionality of the Securities and Exchange Commission’s administrative tribunals.
Overall, the Supreme Court’s decision to uphold the funding mechanism of the Consumer Financial Protection Bureau was a significant victory for the agency and its mission to protect consumers from financial wrongdoing. The ruling was viewed as a defeat for those seeking to limit the power of independent agencies and was seen as a way to maintain the bureau’s ability to enforce regulations and protect consumers in the financial sector.
