Payday lenders argue that the CFPB's funding structure is unconstitutional because it's not funded by money appropriated by Congress. The argument threatens the existence of other agencies, too.
The fate of the CFPB, and other agencies that are similarly funded, is in the hands of the U.S. Supreme Court.The fate of the CFPB, and other agencies that are similarly funded, is in the hands of the U.S. Supreme Court.If you have a mortgage or a loan or a credit card, you likely have more protection from deceptive practices in the financial services industry today than you did at the time of the 2008 financial crash. Now, however, those protections could be in doubt.
In an attempt to protect consumers, the CFPB enacted a rule to limit these repeated fees, and other practices. And the payday lenders challenged the rule in court, losing repeatedly. Eventually, however, one federal appeals court, the Fifth Circuit, ruled that the agency's funding is unconstitutional because the agency gets its money from the Federal Reserve, which in turn, is funded by bank fees.Lawyers for the payday lenders declined to be interviewed for this article.
"If the Supreme Court says that Congress doesn't have the power to set up government agencies and laws without going through appropriations, understand, not only do all the banking regulators fall on their faces, Social Security and Medicare are now at risk," Warren says, noting that none of these agencies are financed through the appropriations process. Rather, they are all financed in different ways--Social Security, for instance through a separate tax.
"If those rules were to just disappear," Loeb says,"there could be a freeze-up of the mortgage system," and the resulting"paralysis" could have"severe consequences for consumers, for bankers and for the economy as a whole."Also siding with the CFPB is a coalition of 15 military and veterans organizations—groups that don't normally file in the Supreme Court.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Consumer bureau poised for the fight of its life before Supreme CourtMany Democrats see the case as part of a broad-based attack on the regulatory state by Republicans eager to bring challenges before the Supreme Court.
Read more »
Biggest Supreme Court cases to watch in new termThe Supreme Court returned for its new term on Monday with several potentially major cases ahead. Jimmy Hoover, Supreme Court reporter at the National Law Journal, joins CBS News to take a look at some of the most important and controversial cases on the docket.
Read more »
Fact Check Team: Supreme Court returns to controversial cases amid record low public approvalThe Supreme Court is back in session and will have to tackle several controversial cases this term.
Read more »
The Supreme Court opens its new term with a case about prison terms for drug dealersThe Supreme Court has opened its new term with a case about prison terms for drug dealers and rejections of hundreds of appeals, including one from an attorney who pushed a plan to keep former President Donald Trump in power.
Read more »
Supreme Court Set to Hear Challenge to CFPB Funding ModelSee multiple perspectives from Reuters, Wall Street Journal (Opinion), and Washington Post at AllSides.com.
Read more »