Monday, December 5 2022

Peterson and other legal experts said the CFPB is likely to seek a stay of judgment and a review by the entire 5th Circuit. Such an en banc review could confirm, weaken or reverse the decision made by the three judges. Anything less than a full reversal increases the likelihood that the case will go to the Supreme Court.

“There is nothing new or unusual about Congress’ decision to fund the CFPB outside of annual spending bills,” said Sam Gilford, a spokesman for the CFPB, without commenting on an objection. Gilford added that other federal financial regulators and the Federal Reserve System are funded this way and that the CFPB will continue to enforce the law and protect consumers.

Just two years ago, the Supreme Court limited the CFPB’s independence, finding that isolating the director from the president’s control was unconstitutional, but took no objection to its funding structure. However, the 5th Circuit Panel’s decision raises the stakes by raising a question that the High Court did not directly address in 2020.

“The only constitutional flaw we found in the structure of the CFPB is the director’s foreclosure against removal,” Chief Justice John G. Roberts Jr. wrote in a 5-4 decision in a case known as Seila Law v. CFPB for the majority. In the 2010 law that established the CFPB, Congress said the president could only fire the director for cause.

Roberts, along with Conservative Justices Samuel A. Alito Jr. and Brett M. Kavanaugh, wrote that giving the director so much independence was unconstitutional, but did not declare the agency rules unconstitutional. And they denied Seila Law’s motion to dissolve the CFPB because they believed the director’s isolation from presidential authority was unconstitutional.

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