CFSA Asks Supreme Court to Uphold Ruling that CFPB Is Illegally Funded

Learn why the credit union groups CUNA and NAFCU both support the Consumer Financial Services Association's stance on the CFPB funding scheme.

David Baumann


Jul 5



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David Baumann

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David Baumann

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Arguments have been supported by credit union trade groups CUNA and NAFCU.

The CFPB is an unconstitutionally funded agency that operates as a legislature, prosecutor and court, the association representing the nation’s payday lenders contends in a brief filed with the U.S. Supreme Court on Monday.

The Consumer Financial Services Association (CFSA) is the defendant in a high-stakes case challenging the CFPB’s funding mechanism. The association argues that the bureau is unconstitutional because it simply draws money from the Federal Reserve and is not subject to annual appropriations. As a result, it maintains, the payday lending rule that affects the association’s members should be voided.

Backstory and CU Group Involvement

The CFPB has argued that the agency is constitutionally funded because Congress authorized the funding mechanism in the Dodd-Frank Act.

However, the Fifth Circuit Court of Appeals agreed with the CFSA and, as a result, the CFPB appealed to the Supreme Court, which accepted the case.

The bureau and many supporters already have filed briefs; Monday was the deadline for the association to file its brief.

The Supreme Court is scheduled to hear oral arguments in the case this Fall.

Financial services trade groups, including CUNA and NAFCU, have supported the CFSA argument and have even gone a step further in calling for an end to the single-director structure of the bureau. Instead, they want the CFPB to be governed by a commission.

CFSA Arguments

In its brief, the CFSA said that in the Dodd-Frank Act, Congress abdicated its fiscal power and eliminated the ability of future Congresses to wield a check against the agency.

“The CFPB self-determines how much public funding it needs each year, subject only to an illusory cap set so high that the agency has never come close to hitting it,” the association stated.

In the most recent fiscal year, the agency only took $641.5 million of the $734 million available, the trade group noted.

The bureau can continue to set its funding level forever unless prohibited by Congress, the CFSA said, adding that it provides a blueprint for destroying our system of checks and balances.

The CFPB has argued that its funding scheme is similar to the ways federal financial regulators are funded. However, the CFSA said that those agencies are funded through assessments paid by the entities they regulate and, therefore, the agencies are fiscally and politically accountable.

“These agencies are in an entirely unrelated family, given their historical pedigree and their comparative accountability due to their direct dependence on the public,” the brief states.

What Comes Next?

Congressional Republicans support the CFSA position, and legislation changing the funding mechanism and structure of the CFPB is part of the House Republican FY24 Financial Services spending bill.

That position also had been pushed by the Trump Administration and indeed the CFSA’s lead attorney is Noel Francisco, who served as solicitor general in the Trump Administration.

Many groups are expected to file briefs supporting the CFSA’s position and one has already been submitted by the conservative Constitutional Counsel Group.

“Congress cannot delegate its constitutionally as-signed powers to any other agency or entity,” the group said. “The Constitution vests the power of appropriation only in Congress.”

One of the lead attorneys for the group is John Eastman, a controversial lawyer, who, in 2020, urged then-Vice President Mike Pence to delay the certification of the presidential election. In December, a federal judge found that Eastman had “dishonestly conspired” to obstruct the session of Congress held to certify the election.

Eastman currently faces a disciplinary hearing before the California bar.

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