A 27-state coalition of attorneys general is asking the Supreme Court to side with a lower court regarding the unconstitutionality of the Consumer Financial Protection Bureau’s (CFPB) funding mechanism.
The coalition filed an amicus brief in Consumer Financial Protection Bureau v. Community Financial Services Association of America Ltd.
Under current law, CFPB can obtain hundreds of millions in funding by sending a half-page letter to the Federal Reserve. However, the U.S. Court of Appeals for the Fifth Circuit ruled last year that the Obama-era funding mechanism is illegal and that Congress has the power of the purse to oversee federal agency funding.
“We are asking the Supreme Court to, once and for all, set the record straight and order CFPB to acquire, through Congress, constitutionally appropriated funds,” Attorney General Morrisey said in a press release. “The CFPB cannot operate outside the boundaries provided by the Constitution.”
While the CFPB and its defenders point to other agencies receiving funding without Congressional approval in their defense, the attorneys general argue that does not make it right.
“They maintain that other agencies have similar funding structures, for instance,” the attorneys general wrote in their brief. “But the list of self-funded agencies is short, and a potential constitutional violation elsewhere doesn’t immunize one here, anyway.”
The Fifth Circuit ruled that CFPB’s Congressional bypass violates the Constitution’s Appropriations Clause and separations of powers doctrine.
“No money shall be drawn from the Treasury, but in consequence of Appropriations made by law,” the clause says.
The attorneys general think that the language is clear.
“The Appropriations Clause offers Congress one of its most powerful tools to supervise and control federal administrative agencies,” the attorneys general wrote in the brief. “The appropriations power is essential to the separation of powers …”
If the Supreme Court upholds the Fifth Circuit’s ruling, the CFPB would need Congress to approve its annual budget. It could then “rein in some of the agency’s activities, which have increased borrowing costs for some consumers and shut other consumers out of the credit market entirely,” according to the release from Morrisey’s office.
States that signed onto the brief include: Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.
