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Law Firm Accuses CFPB of Unlawful Funding

According to a lawsuit filed in the U.S. District Court for the Southern District of New York, The New Civil Liberties Alliance (NCLA) is alleging that Congress unlawfully divested its legislative appropriations power when it gave CFPB the ability to draw funding directly from the Federal Reserve, without annual appropriations from Congress and without oversight from the appropriations committees of Congress.

“This case, entitled Law Offices of Crystal Moroney v. Bureau of Consumer Financial Protection, may ultimately provide the U.S. Supreme Court the opportunity to revive the Non-delegation Doctrine that five justices expressed interest in revisiting earlier this year in the wake of last June’s Gundy v. United States decision,” NCLA said.

The case also preserves the objection that Congress may not vest executive authority in CFPB, an independent agency led by a single director. The CFPB’s constitutionality is currently under scrutiny. In January, the U.S. House of Representatives filed an Amicus Brief with the U.S. Supreme Court in the case of Seila Law LLC V. Consumer Protection Bureau. According to the brief, the House of Representatives believes that the case has no bearing on the constitutionality of the Bureau,  and as such, the Supreme Court should resolve this case without deciding on the constitutionality of the Bureau.

In the case, Seila Law alleges that the structure of the agency grants too much power to its director. According to court papers, given the CFPB’s broad law enforcement powers, the fact that the president may only remove the director of the CFPB “for inefficiency, neglect of duty, or malfeasance in office” is unconstitutional. In May, the CFPB beat Seila Law before a panel of the 9th U.S. Circuit Court of Appeals.

According to American Enterprise Institute Senior Fellow Peter J. Wallison, there is more at stake than just the constitutionality of the Bureau.

On Real Clear Politics, Wallison argues that this CFPB case is an example of Congress enacting “broadly  phrased laws, essentially delegating the key legislative choices to administrative agencies and violating the Framers’ constitutional plan of separation.”

As Wallison says, “the president has the power through the appointment and removal of executive officials to carry out the policies he was elected to pursue.”

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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