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The Supreme Court announced Monday it would hear a challenge to the Consumer Financial Protection Bureau and weigh whether the agency was lawfully created and funded.
The Biden administration asked the high court to review an October ruling from the U.S. Court of Appeals for the 5th Circuit, which held that Congress ran afoul of the Constitution when it delegated its financial authority to an executive agency.
The CFPB gets funding directly from the Federal Reserve, not through Congress’ appropriations, which runs afoul of the separation of powers, a three-judge 5th Circuit panel said.
The ruling invalidated the Payday Lending Rule, which became effective in 2018. It restricted lenders’ ability to provide consumers with loans unless they have determined the potential borrowers have the ability to repay according to certain terms, and also restricted lenders’ account access to repay loans.
The three-judge panel reasoned that Congress appropriates funds via the Constitution’s Appropriations Clause but handed over that authority when it created the CFPB, giving the agency unchecked power.
