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**MARCH 24, 2023**
Kuttner on TAP
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**** An Appeals Court Upholds Constitutionality
of the CFPB
And the decision was written by a Trump appointee, no less. Even this
Supreme Court will be hard-pressed to disagree.
Ever since Elizabeth Warren came up with the idea of a Consumer
Financial Protection Bureau, directly funded by the Federal Reserve to
shield it from congressional meddling, the CFPB, created as part of the
Dodd-Frank Act, has been high on the right wing's hit list. The
animosity only intensified since the bureau has been headed by the
superb Rohit Chopra
<[link removed]>,
whose actions have spotlighted and curbed corporate abuses, levied
billions in fines, and saved consumers at least $15 billion.
The CFPB has not only been consumer protection at its best. Its actions
have been an ongoing reminder of all the ways that corporations and
banks will use their power to deceive and harm ordinary people, and why
we need the counterweight of affirmative, activist government.
Last October, a three-judge panel of the U.S. Court of Appeals for the
Fifth Circuit, all Trump-appointed judges, ruled that the funding
mechanism of the CFPB, and the provision that its director can only be
removed for cause, violated the constitutional separation of powers, and
that all of its decisions were presumably void.
In February, the Supreme Court agreed to take the case. But yesterday,
in a blistering, scholarly, and thoroughly documented ruling, another
appellate circuit court, the Second Circuit, held that the CFPB was
entirely constitutional. This decision was also written by a Trump
appointee, Judge Richard J. Sullivan.
The practical problem for any ruling holding unconstitutional the
CFPB's funding mechanism, which indeed circumvents the annual
appropriations process, is that it would also have to toss out the
funding systems for several other government agencies, including Social
Security, Medicare, the FDIC, and the Federal Reserve itself.
Reviewing the history of similar legislation and repeated findings by
earlier Supreme Court decisions, the Second Circuit ruling held
<[link removed]>: "[W]e cannot find any support for the Fifth
Circuit's conclusion in Supreme Court precedent. To the contrary, the
Court has consistently interpreted the Appropriations Clause to mean
simply that 'the payment of money from the Treasury must be
**authorized by a statute**.'" The decision also approvingly quoted an
earlier ruling by Justice Elena Kagan, leader of the high court's
liberals.
Because the Supreme Court agreed to hear the appeal only in February,
the case will not be argued this term, but in 2024. By then, the CFPB
will have cracked down on more abusive corporate practices and saved
consumers many more billions.
Once again, Elizabeth Warren did her homework well. Unless the high
court wants to shut down the Federal Reserve-and there have been times
when that seemed an attractive idea-it is awfully hard to see how even
this Supreme Court can kill the CFPB.
~ ROBERT KUTTNER
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