Ex-Attorney Appeals Decision that Found CFPB Funding Constitutional

Learn why a former debt collection attorney has petitioned the Supreme Court regarding the CFPB's funding scheme.

David Baumann


Jun 29



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David Baumann

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David Baumann

A squiggly pink arrow pointing downward and to the right.

Petition represents the latest in ongoing debate over bureau’s funding scheme.

The CFPB is a heavy-handed, unaccountable agency that has hounded a former debt collector for years, that collector herself alleged, as she filed a request this month for the U.S. Supreme Court to consider the constitutionality of the agency’s funding scheme.

Attorneys for Crystal Moroney, a former debt collection attorney, charge in her petition that the CFPB drove her out of business when it repeatedly demanded documents and other items from her.

Moroney is being represented by the New Civil Liberties Alliance, an organization that says its aim is to “protect constitutional freedoms from violations by the Administrative State."

Backstory and Context

The Second Circuit Court of Appeals has ruled that the CFPB’s funding is constitutional even though it does not go through the congressional appropriations process.

The Fifth Circuit Court of Appeals has issued an opposite ruling, stating that the agency’s funding is unconstitutional and, therefore, any rules it has issued are illegal. The U.S. Supreme Court has agreed to consider that case, with oral arguments expected this fall.

Inside the Petition

Moroney’s attorneys contend that in enacting the Dodd-Frank Act in 2010, “Congress handed CFPB a blank check and authorized the Bureau in perpetuity to fill in virtually any amount it deems appropriate.”

The document states further that the CFPB has issued two Civil Investigative Demands (CIDs) requiring her to produce a massive number of documents.

Moroney refused to comply with the second CID, arguing that she already had provided the agency with all the information it reasonably could ask for.

“The experiences of Petitioner and Crystal Moroney well illustrate the abuses that can arise when an Executive Branch agency is funded outside the congressional appropriations process and thus faces no budgetary constraints,” her attorneys wrote.

Moroney’s representatives also contend that the agency has never informed her she is the subject of an investigation.

“It is difficult to imagine that an agency would squander its resources so profligately if it were subject to normal budgetary constraints,” the petition reads.

The attorneys added, “Whether a federal agency should be permitted to wield that degree of power without being subject to normal budgetary constraints is an issue of concern to all citizens.”

Redirecting Priorities

Moroney’s team said an agency that must live within the appropriations provided by Congress would be forced to prioritize cases and consider the most pressing ones.

“Second, a cautious agency official will avoid overly aggressive enforcement activity that might aggravate some members of Congress and result in reduced future appropriations,” they argued.

Ironically, that is the exact argument used by supporters of the current CFPB funding scheme. Those supporters contend that by separating the agency from the appropriations process, Dodd-Frank insulated the agency from political pressure.

But Moroney sees things differently.

“The lack of those constraints likely contributed significantly to CFPB’s heavy-handed pursuit of Petitioner, a pursuit which ultimately forced the small law firm to cease operations,” her attorneys wrote.

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