Ahead of an expected ruling by the U.S. Supreme Court, a three-judge panel for the U.S. Court of Appeals for the Second Circuit [1] has ruled that the Consumer Financial Protection Bureau [2] (CPFB) independent funding through the Federal Reserve is constitutional.
The ruling, which was unanimous, further solidifies provisions of the Dodd-Frank Act [3]. The CPFB was created in 2008 with the passage of the Dodd-Frank Act, and is funded by the Federal Reserve, not Congress [4]. Since its inception, the CFPB has recovered approximately $15 billion for customers, including a recent record $1.7 billion civil fine, in addition to $2 billion in mandated customer reimbursements, imposed by the CFPB on Wells Fargo [5] for abuses related to customer accounts.
The case at hand deals with the Law Offices of Cristal Moroney PC, a debt collection law firm out of New York, is attempting to get around a civil subpoena issued against them in 2017. Previously, a lower court ruled in the CFPB’s favor in August 2020.
SCOTUS is expected to hear the case on their October 2023 schedule.
The Court of Appeals for the Fifth Circuit [6] previously ruled that the CPFB’s funding violates the Constitution and should be subject to Congressional appropriations.
In its Thursday ruling, the Second Circuit found that there is no supporting evidence to grant validity to the Fifth Circuit’s ruling.