The Supreme Court heard oral arguments on October 3, 2023 in Consumer Financial Protection Bureau v. Community Financial Services Association of America, Ltd. The issue before the Court is whether the CFPB's funding mechanism violaties the U.S. Constitution's Appropriations Clause (U.S. Const. art. I, ' 9, cl. 7). Solicitor General, Elizabeth Prelogar argued on behalf of the CFPB and Noel Francisco (a former Solicitor General) argued for the Community Financial Services Association of America, Ltd. (CFSA).
The CFPB's distinct funding mechanism is promulgated in the Dodd-Frank Act of 2010. Unlike other federal agencies, the CFPB's funding is drawn directly from the Federal Reserve System. The CFPB requests funding on an annual basis, according to what the CFPB's director finds "reasonably necessary to carry out" the authorities of the CFPB under Federal consumer financial law. 12 U.S.C. 5497(a)(1). The CFPB is subject to a cap of 12% of the Federal Reserve System's total operating expenses.
In 2017, the CFPB promulgated a rule (Rule) regulating "payday" loans, which are typically short-term, high interest loans, as well as other short-term loans, including certain vehicle title and high-cost installment loans. 12 C.F.R. 1041.
The following year, the CFSA and the Consumer Service Alliance of Texas (CSA) filed a lawsuit challenging the...
