A Paul, Weiss Podcast
Court Briefs
Consumer Financial Protection Bureau v. Community Financial Services Association
In the latest installment of "Court Briefs," Kannon Shanmugam, along with Abigail Frisch Vice and Brian Lipshutz, delves into the Supreme Court's recent ruling in Consumer Financial Protection Bureau v. Community Financial Services Association.
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Episode Transcript
Kannon Shanmugam: Welcome to “Court Briefs,” a podcast from Paul, Weiss. I'm your host, Kannon Shanmugam, the chair of the firm's Supreme Court and Appellate Litigation Practice and co-chair of our Litigation Department. In this podcast, we analyze Supreme Court decisions of interest to the business community.
We're actually coming to you today from Birmingham, Alabama, where we just got out of an oral argument in the 11th Circuit, and I'm joined by two of my colleagues from the Supreme Court and Appellate Practice, Abby Vice and Brian Lipshutz, to talk about the Supreme Court's recent decision in a case called Consumer Financial Protection Bureau v. Community Financial Services Association, or CFPB v. CFSA for short. This is actually the second constitutional challenge to the structure of the CFPB. In a case called Seila Law v. CFPB, which we litigated here at Paul, Weiss, the Supreme Court invalidated Congress's limitations on the removal of the director of the CFPB. This case is kind of the sequel to Seila Law, and Abby, tell us a little bit about the facts of the case.
Abigail Frisch Vice: Absolutely. Well, in the wake of the 2008 financial crisis, Congress enacted a new agency, the CFPB, and sought to insulate it from the political process. And it did that by providing an unusual funding mechanism that was outside the ordinary annual appropriations process. And that mechanism is that every year, the CFPB director requests from the Federal Reserve Board earnings, and this is statutory language, in the amount determined by the director to be reasonably necessary to carry out the CFPB's duties. And then Congress provided a statutory cap, that in 2022, amounted to $734 million. And in addition to that, the CFPB can retain and invest unused funds year over year.
So, the plaintiff CFSA is a trade association, and it represents payday lenders and credit access businesses, and they challenged the CFPB's payday lending rule. They argued that the funding mechanism violates the Appropriations Clause of the U.S. Constitution. And that clause says that no money shall be drawn from the Treasury, but in consequence of appropriations made by law. And the Fifth Circuit held that the unusual funding model violated the Appropriations Clause by giving the agency a self-actualizing perpetual funding mechanism.
Kannon Shanmugam: So, I think many observers thought that this was going to be an uphill fight before the Supreme Court, and so it proved. Brian, tell us a little bit about what the court did.
