Appeal ruling could force Supreme Court to reconsider CFPB

Peterson and other legal experts have said the CFPB should seek a stay of decision and a full 5th Circuit review. Such a bench review could confirm, soften or reverse the decision made by the three judges. Anything less than a complete reversal increases the likelihood that the case will go to the Supreme Court.

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

Only two years ago, the Supreme Court restricted the CFPB’s independence, finding that isolating the director of presidential oversight violated the constitution, but did not challenge its funding structure. The 5th Circuit panel’s decision, however, ups the ante by posing a question the High Court has not directly addressed in 2020.

“The only constitutional flaw we have identified in the structure of the CFPB is the insulation of the director from removal,” Chief Justice John G. Roberts Jr. wrote for the majority in a 5-4 ruling in a high-profile case. as Seila Law v. CFPB. In the 2010 law that created the CFPB, Congress said the president could only fire the director for cause.

Roberts, joined by conservative justices Samuel A. Alito Jr. and Brett M. Kavanaugh, wrote that it was unconstitutional to give the director so much independence, but did not declare the agency’s rules unconstitutional. And they rejected Seila Law’s request to disband the CFPB if they felt that isolating the Director of Presidential Authority was unconstitutional.