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The Wall Street Journal: Three-judge appeals panel says CFPB funding structure is unconstitutional


WASHINGTON — A federal appeals court found the U.S. Consumer Financial Protection Bureau is funded through an unconstitutional method, a ruling that threw out the agency’s regulation on payday lenders and struck a blow against how the agency operates.

The decision, by a three-judge panel of the Fifth U.S. Circuit Court of Appeals in New Orleans, found the CFPB’s funding structure violated the Constitution’s doctrine of separation of powers, which sets the authority of the three branches of government. Congress has the sole power of the federal purse, and the bureau’s funding structure undercuts that authority, the court said.

See: CFPB sues MoneyLion for imposing ‘illegal and excessive charges’ on U.S. servicemembers

Also: ‘Online trickery’: CFPB sues event-registration company for allegedly tricking customers into paying $300 million in subscriptions

When Congress created the CFPB through the 2010 Dodd-Frank financial overhaul law, it exempted the agency from the annual legislative appropriations process. Rather than having Congress review and vote on its budget, the bureau gets its money through transfers from the Federal Reserve, up to a certain cap. The Fed can’t turn down requests under that cap.

“Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers,” Judge Cory Wilson wrote for the court. All three judges on the panel were appointed during the one-term presidency of Donald Trump.

An expanded version of this report appears at

From the archives:

New director of CFPB says agency will halt efforts to change name

Consumer protection agency name change could cost banks $300 million; report

Waters says she’ll investigate Mick Mulvaney’s actions at CFPB

Mulvaney axes CFPB’s consumer advisory board

Here’s what is known about the surprising choice to lead the CFPB

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