Supreme Court rebuffs challenge to consumer protection agency

WASHINGTON — The Supreme Court on Thursday rejected a business-backed challenge that could have scuttled the federal agency set up to protect consumers from shady financial services practices.

The court in a 7-2 vote ruled that the funding structure of the Consumer Financial Protection Bureau (CFPB), which allows the agency to be funded directly by the Federal Reserve, is constitutionally sound.

In doing so, the court rejected claims brought by two trade groups representing lenders, which argued that the agency had to be funded by annual appropriations approved by Congress.

"Today’s decision is a resounding victory for American families and honest businesses alike, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent, and competitive," a CFPB spokesman said in a statement.

Conservative Justice Clarence Thomas authored the majority opinion, while fellow conservatives Justice Samuel Alito and Justice Neil Gorsuch dissented.

The court ruled that the funding structure, in which Congress does not directly appropriate funding, does not run afoul of the Constitution’s appropriations clause, which requires that “no money shall be drawn from the Treasury” without congressional approval.

“Although there may be other constitutional checks on Congress’ authority to create and fund an administrative agency, specifying the source and purpose is all the control the Appropriations Clause requires,” Thomas wrote.

The case is one of several on the docket in which the Supreme Court, often skeptical of broad federal agency power, could hobble government regulators.

In dissent, Alito said the court had affirmed a novel funding structure that allows the agency to “bankroll its own agenda