Current:Home > reviewsSupreme Court to hear case that threatens existence of consumer protection agency -ProfitLogic
Supreme Court to hear case that threatens existence of consumer protection agency
View
Date:2025-04-11 23:22:00
The Supreme Court agreed on Monday to take up a case that could threaten the existence of the Consumer Financial Protection Bureau and potentially the status of numerous other federal agencies, including the Federal Reserve.
A panel of three Trump appointees on the Fifth Circuit Court of Appeals ruled last fall that the agency's funding is unconstitutional because the CFPB gets its money from the Federal Reserve, which in turn is funded by bank fees.
Although the agency reports regularly to Congress and is routinely audited, the Fifth Circuit ruled that is not enough. The CFPB's money has to be appropriated annually by Congress or the agency, or else everything it does is unconstitutional, the lower courts said.
The CFPB is not the only agency funded this way. The Federal Reserve itself is funded not by Congress but by banking fees. The U.S. Postal Service, the U.S. Mint, and the Federal Deposit Insurance Corp., which protects bank depositors, and more, are also not funded by annual congressional appropriations.
In its brief to the Supreme Court, the Biden administration noted that even programs like Social Security and Medicare are paid for by mandatory spending, not annual appropriations.
"This marks the first time in our nation's history that any court has held that Congress violated the Appropriations Clause by enacting a law authorizing spending," wrote the Biden administration's Solicitor General Elizabeth Prelogar.
A conservative bête noire
Conservatives who have long opposed the modern administrative state have previously challenged laws that declared heads of agencies can only be fired for cause. In recent years, the Supreme Court has agreed and struck down many of those provisions. The court has held that administrative agencies are essentially creatures of the Executive Branch, so the president has to be able to fire at-will and not just for cause.
But while those decisions did change the who, in terms of who runs these agencies, they did not take away the agencies' powers. Now comes a lower court decision that essentially invalidates the whole mission of the CFPB.
The CFPB has been something of a bête noire for some conservatives. It was established by Congress in 2010 after the financial crash; its purpose was to protect consumers from what were seen as predatory practices by financial institutions. The particular rule in this case involves some of the practices of payday lenders.
The CFPB was the brainchild of then White House aide, and now U.S. Senator Elizabeth Warren. She issued a statement Monday noting that lower courts have previously and repeatedly upheld the constitutionality of the CFPB.
"If the Supreme Court follows more than a century of law and historical precedent," she said, "it will strike down the Fifth Circuit's decision before it throws our financial market and economy into chaos."
The high court will not hear arguments in the case until next term, so a decision is unlikely until 2024.
veryGood! (2)
Related
- Are Instagram, Facebook and WhatsApp down? Meta says most issues resolved after outages
- The Daily Money: Disney+ wants your dollars
- Audit: California risked millions in homelessness funds due to poor anti-fraud protections
- Residents in Alaska capital clean up swamped homes after an ice dam burst and unleashed a flood
- Whoopi Goldberg is delightfully vile as Miss Hannigan in ‘Annie’ stage return
- A balloon, a brief flicker of power, then disruption of water service for thousands in New Orleans
- New Orleans mayor’s former bodyguard making first court appearance after July indictment
- From bitter rivals to Olympic teammates, how Lebron and Steph Curry became friends
- The FTC says 'gamified' online job scams by WhatsApp and text on the rise. What to know.
- Three people arrested in rural Nevada over altercation that Black man says involved a racial slur
Ranking
- A South Texas lawmaker’s 15
- Could we talk ourselves into a recession?
- Drones warned New York City residents about storm flooding. The Spanish translation was no bueno
- Olympic track and field live results: Noah Lyles goes for gold in 200, schedule today
- In ‘Nickel Boys,’ striving for a new way to see
- Hampton Morris wins historic Olympic weightlifting medal for USA: 'I'm just in disbelief'
- NCAA President Charlie Baker would be 'shocked' if women's tournament revenue units isn't passed
- Texas school tried to ban all black attire over mental-health concerns. Now it's on hold.
Recommendation
Jamie Foxx reps say actor was hit in face by a glass at birthday dinner, needed stitches
RFK Jr. closer to getting on New Jersey ballot after judge rules he didn’t violate ‘sore loser’ law
The Daily Money: Disney+ wants your dollars
Olympics track highlights: Quincy Hall wins gold in 400, Noah Lyles to 200 final
Paula Abdul settles lawsuit with former 'So You Think You Can Dance' co
1 of last GOP congressmen who voted to impeach Trump advances in Washington’s US House race
'The Umbrella Academy' Season 4: Release date, time, cast, how to watch new episodes
Taylor Swift Cancels Austria Concerts After Confirmation of Planned Terrorist Attack