CFPB files unconstitutional lawsuit with Supreme Court

of Consumer Financial Protection Bureau (CFPB) submitted a brief this week. US Supreme Court It argues that its funding sources do not violate the appropriations clause of the United States Constitution, despite the violation of a recent Fifth Circuit Court of Appeals ruling.

In a brief, the CFPB is seeking to reverse the Fifth Circuit’s decision. Association of American Community Financial Services Corporation vs. CFPB, arrived late last year. In this decision, the Chief Justice panel ruled that the CFPB’s design was unconstitutional. federal reserve It is not an appropriation bill passed by Congress.

In its brief, the CFPB said that “diversion” of funds was “a mere act of making certain sources of funds available for certain uses,” and that “the founders restricted Congress’ powers when they wanted to spend the budget.” knew how to do it.”

Immediately before the appropriations clause of the constitution is a clause that limits the expenditure of funds for raising the armed forces to a term of no more than two years.

Alexander Hamilton explained that under that other provision, Congress was not “free to give permanent funding to the executive branch for the support of the military.” Instead, “at least once every two years, it is obliged to deliberate on the advisability of stationing troops on foot,” the memorandum said.

This argument is similar to the conflicting Second Circuit Court of Appeals decision in March that found the CFPB’s constitutionality valid.

“[T]The CFPB’s funding structure is not constitutionally vulnerable to either the appropriations clause or the non-delegation doctrine,” the Second Circuit ruled, in part.

In February, the Supreme Court agreed to hear a lawsuit challenging the agency’s constitutionality next term. The Biden administration has sought expedited rulings on appeals, but courts will instead wait until October’s new term. However, a ruling on the case is not expected until early 2024 at the earliest.

This is the latest challenge to the CFPB’s constitutionality. In mid-2020, the court heard: Seila Law LLC v. Consumer Financial Protection Bureauasked the Court to determine whether the CFPB’s substantive executive powers violated the constitutional principle of separation of powers between federal government departments.

In this case, the Supreme Court ruled that the CFPB’s appointed directors are subject to removal by the President of the United States, but did not go so far as to invalidate the CFPB’s organization.

For this reason, President Biden decided to seek the appointment of his own CFPB board after taking office. A similar ruling was issued by the Supreme Court regarding the Federal Housing Finance Agency, which ultimately led to the resignation of the previous administration’s FHFA director and the appointment of incumbent Sandra Thompson.

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