Current:Home > NewsSupreme Court backs Biden on CFPB funding suit, avoiding warnings of housing 'chaos' -Wealth Axis Pro
Supreme Court backs Biden on CFPB funding suit, avoiding warnings of housing 'chaos'
View
Date:2025-04-18 16:38:14
WASHINGTON – The Supreme Court on Thursday batted away a challenge to how the Consumer Financial Protection Bureau is funded, keeping the Obama-era agency in place and sustaining a regulation from 2017 that cracked down on payday lenders.
Instead of subjecting the bureau to annual budget fights on Capitol Hill like most of the government, the CFPB is funded through the Federal Reserve − an effort to shield it from political pressure. Critics said the arrangement violated the Constitution and the principle that Congress alone wields the power of the purse.
The 7-2 decision was a victory for the Biden administration which had asked the court to overturn a conservative appeals court decision invalidating the funding mechanism.
Writing for the majority, Justice Clarence Thomas said funding doesn’t have to come through the congressional appropriation process. An appropriation, he wrote, “is simply a law that authorizes expenditures from a specified source of public money for designated purposes.”
“The statute that provides the Bureau’s funding meets these requirements,” he wrote.
Prep for the polls: See who is running for president and compare where they stand on key issues in our Voter Guide
More:MyPillow CEO Mike Lindell, a Trump ally, has his phone seizure case rejected by Supreme Court
In a dissent joined by Justice Neil Gorsuch, Justice Samuel Alito said the majority’s interpretation allows for laws that would let an agency “draw as much money as it wants from any identified source for any permissible purpose until the end of time.”
"It's not an exaggeration to say that the CFPB's enjoys a degree of financial autonomy that a Stuart king would envy," Alito wrote.
Biden: `win for American consumers'
President Joe Biden called the decision an “unmistakable win for American consumers” in protecting a bureau that he said has saved billions for Americans on credit card late fees, overdraft charges and other “junk fees.”
“In the face of years of attacks from extreme Republicans and special interests, the Court made clear that the CFPB’s funding authority is constitutional and that its strong record of consumer protection will not be undone,” Biden said in a statement.
While the case involved a technical matter about the agency’s funding, the implications were potentially vast. A ruling against the agency could have called into question virtually every regulation it has approved affecting auto loans, mortgages and even credit cards. The Mortgage Bankers Association warned that a broad ruling from the high court could have sent the housing market "into chaos, to the detriment of all mortgage borrowers."
The justices appeared to be sensitive to those concerns during oral arguments in October. Even some of the court’s most stalwart conservatives, who have sought to limit the power of federal agencies in other cases, appeared skeptical of the industry’s challenge.
CFPB enforces lending rules
Congress created the bureau in 2010 in part to enforce lending regulations. The agency is funded by the Federal Reserve, which gets its money from banking fees and other sources.
At the center of the case was a payday lending rule the bureau issued in 2017. The rule bars lenders from withdrawing payments from borrowers' bank accounts after two failed attempts. The extra withdrawal attempts, the agency said, would likely not help lenders recoup any money but instead saddle borrowers with overdraft fees. Payday lending groups sued over the agency's funding method.
Before the case reached the Supreme Court, a three-judge panel of the Louisiana-based U.S. Court of Appeals for the 5th Circuit ruled that the agency acted within its power to create the regulation. But the appeals court ruled that the way Congress set up the agency’s funding violated the constitutional principle that only Congress has the power to initiate spending.
The Center for Responsible Lending said the Supreme Court's reversal of the appeals court's decision will enable the federal watchdog agency to continue protecting “American’s wallets from predatory financial firms.”
“The Supreme Court’s ruling provided a welcome dose of common sense as it rejected an unprecedented, reckless argument that could have destabilized a housing market that undergirds our economy and invited challenges to funding for most of the federal government, including Medicare and the Federal Reserve,” said Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending.
The case, which was argued in October on the first day of the current term, is Consumer Financial Protection Bureau v. Community Financial Services Association of America.
veryGood! (99)
Related
- What were Tom Selleck's juicy final 'Blue Bloods' words in Reagan family
- Solar panels that can generate electricity at night have been developed at Stanford
- Taylor Swift's Handmade Eras Tour Backstage Pass Is Something Out of a Lavender Haze
- Lincoln College closes after 157 years, blaming COVID-19 and cyberattack disruptions
- Elon Musk's skyrocketing net worth: He's the first person with over $400 billion
- The Bachelorette's Andi Dorfman Shares Details on Her Upcoming Italian Wedding
- Zach Shallcross Reveals the Bachelor: Women Tell All Moment That Threw Him a “Curveball”
- Tobacco giant admits to selling products to North Korea, agrees to pay more than $600 million
- From family road trips to travel woes: Americans are navigating skyrocketing holiday costs
- Hairstylist Chris Appleton Confirms Romance With Lukas Gage
Ranking
- Which apps offer encrypted messaging? How to switch and what to know after feds’ warning
- Royal Caribbean cruise ship passenger goes overboard on trip to Hawaii
- Elon Musk says he's put the blockbuster Twitter deal on pause over fake accounts
- U.S. to send nuclear submarines to dock in South Korea for first time since 1980s
- Apple iOS 18.2: What to know about top features, including Genmoji, AI updates
- Mary-Kate and Ashley Olsen's It Takes Two Co-Star Reveals Major Easter Egg You Totally Missed
- Elon Musk says he'll reverse Donald Trump Twitter ban
- TikToker Abbie Herbert Reveals Name of Her Baby Boy in the Sweetest Way
Recommendation
How to watch new prequel series 'Dexter: Original Sin': Premiere date, cast, streaming
Transcript: Gary Cohn on Face the Nation, April 30, 2023
Ulta 24-Hour Flash Sale: Take 50% Off Dermalogica, Clarins, Lancôme, and Ofra Cosmetics
Deepfake video of Zelenskyy could be 'tip of the iceberg' in info war, experts warn
Have Dry, Sensitive Skin? You Need To Add These Gentle Skincare Products to Your Routine
Why Twitter is an easy target for outsiders like Elon Musk intent on change
How period tracking apps and data privacy fit into a post-Roe v. Wade climate
Here's how Americans view facial recognition and driverless cars