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Supreme Court rules in favor of CFPB, brainchild of Sen. Elizabeth Warren

The Supreme Court ruled on Thursday that the funding mechanism that feeds the Obama-era agency Consumer Financial Protection Bureau (CFPB) is constitutional.

In a 7-2 decision, authored by Justice Clarence Thomas, the court held that Congress uniquely authorized the bureau to draw its funding directly from the Federal Reserve System, therefore allowing it to bypass the usual funding mechanisms laid out in the Appropriations Clause of the Constitution.

"For most federal agencies, Congress provides funding on an annual basis. This annual process forces them to regularly implore Congress to fund their operations for the next year. The Consumer Financial Protection Bureau is different. The Bureau does not have to petition for funds each year. Instead, Congress authorized the Bureau to draw from the Federal Reserve System the amount its Director deems ‘reasonably necessary to carry out’ the Bureau’s duties, subject only to an inflation-adjusted cap," Thomas wrote.

"In this case, we must decide the narrow question whether this funding mechanism complies with the Appropriations Clause. We hold that it does," the opinion states.


The CFPB, launched in 2008 with the help of Democrat Senator Elizabeth Warren, D-Mass., in the aftermath of the market crash, with authority to regulate banking and lending agencies via federal rules.

A group of banking associations, represented by former solicitor general Noel Francisco, sued the CFPB, arguing that because the agency, not Congress, decides the amount of annual funding and draws it from the Federal Reserve, it violates the Appropriations Clause.

The Supreme Court’s majority disagreed, saying,

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