Supreme Court to begin hearing arguments on CFPB constitutionality

The U.S. Supreme Court today is set to hear arguments in a case challenging the constitutionality of the Consumer Financial Protection Bureau.

Case Details: In Community Financial Services Association of America v. CFPB, the high court is reviewing a Fifth Circuit decision that held the CFPB’s funding violates the Constitution’s appropriations clause because it is not subject to review by congressional appropriations committees. Instead, the bureau receives funding from the Federal Reserve, an agency that is also not subject to appropriations.

ICBA Brief: In a friend-of-the-court brief earlier this 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. The groups said the court should find the CFPB’s funding structure unconstitutional but mitigate marketplace disruptions by crafting a narrow remedy.

1071 Court Challenges: Meanwhile, separate district courts have issued limited injunctions on the CFPB’s Section 1071 small-business rule until the Supreme Court rules on the bureau’s constitutionality. In a recent court filing in that case, ICBA, the Independent Bankers Association of Texas, and Texas First Bank asked the court for a preliminary injunction prohibiting the CFPB from enforcing the 1071 rule nationwide after the court previously granted a request by the groups to intervene in the case.

Grassroots Resources: ICBA continues encouraging community bankers to use its custom resources to speak out on the 1071 rule.

• ICBA offers custom resources, including social media content and a sample op-ed, to educate and engage customers on the impact of the rule.

• ICBA’s Be Heard grassroots action center allows community bankers to urge their members of Congress to support congressional resolutions to block the rule.