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CFPB Seeks Cert In Funding Dispute – Financial Services

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As we previously predicted, the Consumer Financial Protection
Bureau (CFPB) has asked the Supreme Court to reverse the recent
Fifth Circuit decision finding that the agency’s funding is
unconstitutional. In a petition for certiorari filed less than a
month after the Fifth Circuit decision, the CFPB asks the Supreme
Court to hear the case and decide it this term. The CFPB’s
petition argues that the Fifth Circuit’s conclusion that the
agency’s funding violates the Appropriations Clause was wrong
for numerous reasons. In the CFPB’s words:

The court of appeals relied on an unprecedented and
erroneous understanding of the Appropriations Clause to hold the
CFPB’s statutory funding mechanism unconstitutional. Congress
enacted a statute explicitly authorizing the CFPB to use a
specified amount of funds from a specified source for specified
purposes. The Appropriations Clause requires nothing more. The
court of appeals’ novel and ill-defined limits on
Congress’s spending authority contradict the Constitution’s
text, historical practice, and this Court’s precedent. And the
court of appeals compounded its error by adopting a sweeping
remedial approach that calls into question virtually every action
the CFPB has taken in the 12 years since it was created.

As the last sentence suggests, in addition to arguing that the
Fifth Circuit’s Appropriations Clause analysis was erroneous,
the CFPB argues that the Fifth Circuit’s remedy
analysis—which struck down the CFPB’s Payday Lending Rule
and suggested that all of the agency’s actions were similarly
subject to challenge—was also wrong.

Given the implications of the Fifth Circuit’s ruling, we
expect the Supreme Court to grant cert and decide the case this
term—that is, by June 2023.

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