Current:Home > ScamsSupreme Court to hear case that threatens existence of consumer protection agency -GrowthSphere Strategies
Supreme Court to hear case that threatens existence of consumer protection agency
View
Date:2025-04-12 06:18:55
The Supreme Court agreed on Monday to take up a case that could threaten the existence of the Consumer Financial Protection Bureau and potentially the status of numerous other federal agencies, including the Federal Reserve.
A panel of three Trump appointees on the Fifth Circuit Court of Appeals ruled last fall that the agency's funding is unconstitutional because the CFPB gets its money from the Federal Reserve, which in turn is funded by bank fees.
Although the agency reports regularly to Congress and is routinely audited, the Fifth Circuit ruled that is not enough. The CFPB's money has to be appropriated annually by Congress or the agency, or else everything it does is unconstitutional, the lower courts said.
The CFPB is not the only agency funded this way. The Federal Reserve itself is funded not by Congress but by banking fees. The U.S. Postal Service, the U.S. Mint, and the Federal Deposit Insurance Corp., which protects bank depositors, and more, are also not funded by annual congressional appropriations.
In its brief to the Supreme Court, the Biden administration noted that even programs like Social Security and Medicare are paid for by mandatory spending, not annual appropriations.
"This marks the first time in our nation's history that any court has held that Congress violated the Appropriations Clause by enacting a law authorizing spending," wrote the Biden administration's Solicitor General Elizabeth Prelogar.
A conservative bête noire
Conservatives who have long opposed the modern administrative state have previously challenged laws that declared heads of agencies can only be fired for cause. In recent years, the Supreme Court has agreed and struck down many of those provisions. The court has held that administrative agencies are essentially creatures of the Executive Branch, so the president has to be able to fire at-will and not just for cause.
But while those decisions did change the who, in terms of who runs these agencies, they did not take away the agencies' powers. Now comes a lower court decision that essentially invalidates the whole mission of the CFPB.
The CFPB has been something of a bête noire for some conservatives. It was established by Congress in 2010 after the financial crash; its purpose was to protect consumers from what were seen as predatory practices by financial institutions. The particular rule in this case involves some of the practices of payday lenders.
The CFPB was the brainchild of then White House aide, and now U.S. Senator Elizabeth Warren. She issued a statement Monday noting that lower courts have previously and repeatedly upheld the constitutionality of the CFPB.
"If the Supreme Court follows more than a century of law and historical precedent," she said, "it will strike down the Fifth Circuit's decision before it throws our financial market and economy into chaos."
The high court will not hear arguments in the case until next term, so a decision is unlikely until 2024.
veryGood! (19)
Related
- What were Tom Selleck's juicy final 'Blue Bloods' words in Reagan family
- Midwest’s Largest Solar Farm Dramatically Scaled Back in Illinois
- Clues to Bronze Age cranial surgery revealed in ancient bones
- Coast Guard releases video of intrepid rescue of German Shepherd trapped in Oregon beach
- $73.5M beach replenishment project starts in January at Jersey Shore
- Frozen cells reveal a clue for a vaccine to block the deadly TB bug
- 2018’s Hemispheric Heat Wave Wasn’t Possible Without Climate Change, Scientists Say
- Coast Guard releases video of intrepid rescue of German Shepherd trapped in Oregon beach
- Former Danish minister for Greenland discusses Trump's push to acquire island
- A doctor near East Palestine, Ohio, details the main thing he's watching for now
Ranking
- 2 killed, 3 injured in shooting at makeshift club in Houston
- Arnold Schwarzenegger's Look-Alike Son Joseph Baena Breaks Down His Fitness Routine in Shirtless Workout
- Emma Heming Willis Wants to Talk About Brain Health
- Warning: TikToker Abbie Herbert's Thoughts on Parenting 2 Under 2 Might Give You Baby Fever
- How to watch the 'Blue Bloods' Season 14 finale: Final episode premiere date, cast
- Democratic state attorneys general sue Biden administration over abortion pill rules
- Avatar Editor John Refoua Dead at 58
- 5 Texas women denied abortions sue the state, saying the bans put them in danger
Recommendation
Newly elected West Virginia lawmaker arrested and accused of making terroristic threats
6 Ways Trump’s Denial of Science Has Delayed the Response to COVID-19 (and Climate Change)
Girls in Texas could get birth control at federal clinics — until a dad sued
Iconic Forests Reaching Climate Tipping Points in American West, Study Finds
Nevada attorney general revives 2020 fake electors case
Can Solyndra’s Breakthrough Solar Technology Outlive the Company’s Demise?
Rachel Bilson Baffled After Losing a Job Over Her Comments About Sex
Uber and Lyft Are Convenient, Competitive and Highly Carbon Intensive