Supreme Court finds CFPB funding structure constitutional

The Supreme Court upheld the constitutionality of the Consumer Financial Protection Bureau’s funding structure, reversing the appellate court’s decision that held the CFPB’s funding violates the constitution’s appropriations clause.

Court Decision: The high court ruled 7-2 in CFPB v. Community Financial Services Association of America that funding the CFPB through the Federal Reserve, rather than the annual appropriations process, does not violate the Constitution’s appropriations clause.

ICBA View: In a friend-of-the-court brief filed last year, ICBA and other groups said the bureau’s funding mechanism violates the Constitution’s structural protections embodied in the separation of powers and appropriations clause because it is “doubly insulated” from the appropriations process and because the agency does not receive funding from the industries it regulates.

1071 Challenge: In a statement following the decision, ICBA said it continues to look forward to judicial review of the CFPB’s 1071 small-business data collection and reporting rule. A court filing from ICBA, the Independent Bankers Association of Texas, and Texas First Bank argues that the CFPB violated the law in issuing its 1071 rule by exceeding its statutory authority and by failing to comply with the Administrative Procedures Act when it finalized the rule.

Congressional Challenges: In its statement, ICBA also said it will continue to support legislation to rein in the CFPB’s excessive regulatory burdens that impede access to credit. “ICBA will continue working through every available channel to mitigate the negative impact of excessively burdensome CFPB rulemakings on community banks and the local communities they serve,” ICBA President and CEO Rebeca Romero Rainey said.