The News
The US Supreme Court on Thursday rejected a challenge to the way the Consumer Financial Protection Bureau is financed. If the court had gone the other way, the watchdog agency’s powers would have been severely curtailed — and all of its decisions would have been called into question.
The justices voted 7-2 in favor of the agency, which Congress created in response to the 2008 financial crisis. Justice Clarence Thomas wrote the majority opinion. If the Supreme Court had decided the other way, it would have had broad implications for the funding of all regulatory agencies, including the Federal Reserve Board, Social Security, as well as payments to the national debt.
The high court’s decision reversed a ruling by the conservative 5th Circuit appellate court, which said the funding structure Congress had used to ensure the agency’s independence was unconstitutional. The agency drew ire from conservative groups because unlike most federal agencies, its funding comes via a mechanism outside of Congress’ annual appropriations process.
SIGNALS
Decision is a loss for broader conservative legal agenda
The decision is a setback for an otherwise ascendant conservative legal movement in the US, which has long sought to curtail federal agencies’ power over both private companies and individuals. “The goal has been to disable and delegitimize federal agencies,” Bloomberg Law reported. But the court has several other cases to decide that could also rebalance governmental power, including over gun rights, medication, and religion. And if former president Donald Trump is reelected in November, federal agencies will remain under a microscope: The Trump administration identified the “deconstruction of the administrative state” as one of its top priorities in 2017.
Progressives cheer agency independence
Since the consumer protection watchdog’s creation, more progressive lawmakers have “hailed the bureau’s independence,” The Wall Street Journal wrote, and its mission to ensure consumers aren’t taken advantage of by banks and finance firms in the wake of the 2008 financial crisis. President Joe Biden said the bureau has provided almost $9 billion in consumer relief under his administration, and said the Supreme Court decision was an “unmistakable win for American consumers.”
Conservatives decry blank check for federal agencies
In his dissent opinion, Justice Samuel Alito said the court’s decision allowed the agency to “bankroll its own agenda without any congressional control or oversight.” He added that the ruling means “there is apparently nothing wrong” with laws that allow federal agencies to be funded independently of Congressional budget appropriations — and without an expiration date. The Competitive Enterprise Institute, a libertarian think tank, called the decision “an alarming failure by the court to police the proper exercise of Congress’s constitutional powers.”