Consumer Financial Protection Bureau v. Community Financial Services Ass'n
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Overview
The CFPB draws its operating budget directly from the Federal Reserve, rather than going through the annual congressional appropriations process. A design choice Congress made to insulate the agency from political funding pressure. A payday lending trade group challenged the funding structure as an unconstitutional end-run around the Appropriations Clause. The Supreme Court upheld the funding mechanism 7-2 in May 2024, with Justice Thomas writing that Congress has broad discretion to set up agency funding structures, and the CFPB's arrangement falls within historical practice. The decision settled a years-long challenge that had threatened to invalidate everything the CFPB had done since its founding.
The Conclusion
In a 7-2 decision issued May 16, 2024, the Supreme Court upheld the CFPB's funding structure against an Appropriations Clause challenge. Writing for the majority, Justice Thomas explained that under the Appropriations Clause an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes, and that the statute funding the Bureau meets those requirements. The Court therefore concluded that the Bureau's funding mechanism does not violate the Appropriations Clause, reversing the Fifth Circuit. Justice Alito, joined by Justice Gorsuch, dissented, arguing that centuries of historical practice require more direct legislative control over agency spending.
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