Supreme Court Ruling Upholds CFPB Status Quo

In a 7-2 decision, the Supreme Court on Thursday ruled that the structure under which the Consumer Financial Protection Bureau (CFPB) is funded is constitutional. This decision overturned an October 2022 Fifth Circuit Court ruling that the CFPB’s funding from earnings contributed by the Federal Reserve was unconstitutional since it bypassed the normal annual Congressional appropriations process for federal agencies.

The CFPB, created as part of the 2010 Dodd-Frank legislation, has the authority to adopt consumer protection rules for a broad range of financial products and to supervise almost all non-bank financial firms, as well as banks and credit unions with assets over $10 billion.

The new ruling upholds the CFPB’s ability to be funded outside the normal annual appropriations process and gives the CFPB more independence—both because Congress does not have the authority to cut funding in response to CFPB actions and because the CFPB is not subject to so-called appropriations limitations amendments under which specific actions can be constrained.