Supreme Court to take up challenge to consumer agency
A legal challenge is threatening the Consumer Financial Protection Bureau, which is the Bureau that protects consumers from unlawful financial services practices. The Supreme Court has agreed to resolve a lawsuit that was brought up by certain business groups.
Late last year the agency's funding structure was ruled unconstitutional by a federal appeals court, which threatened its ability to function. The bureau is directed by the Federal Reserve because it doesn't get funding from the annual budget process in Congress. The budget capped at 12% of the total operating expenses from the Federal Reserve and received about $640 million in 2022. The bureau enforces consumer protection laws on issues like credit cards, mortgages, and student loans. The funding structure of the bureau was designed to protect it from any political influence that there might be.
Business interests have looked to diminish the bureau's influence ever since it was first created. Since then, it has faced various legal challenges going against it. Solicitor General Elizabeth Prelogar, who represents the bureau, says, "The appeals court decision threatens to inflict immense legal and practical harms on the agency, consumers, and the financial sector as a whole." This case will be decided in the court's next term in October.
Lenders have argued that the bureau must be funded with appropriations that are approved by Congress and that there are legal defects with the bureau's new payday rule. Lenders are urging the court to not take the case because they believe the present impact of the regulation is limited because mostly restrained by a Louisiana Federal Circuit Court.
Written by: Nate Birck