WASHINGTON (AP) — The Supreme Court on Thursday rejected a conservative-led attack that could have weakened the Consumer Financial Protection Bureau.
The justices ruled 7-2 that the way the agency was funded was not unconstitutional, overruling the lower court. The CFPB was created after the 2008 financial crisis to regulate mortgages, auto loans, and other consumer loans.
The lawsuit was brought by payday lenders who object to the CFPB's rules.
The CFPB's lawsuit is one of several major challenges to federal regulators in this period's proceedings against courts that have tolerated business restrictions for more than a decade. The CFPB, the brainchild of Sen. Elizabeth Warren, Democrat of Massachusetts, has long been opposed by Republicans and their financial backers.
Unlike most federal agencies, the Consumer Affairs Bureau is not dependent on Congress' annual budget process. Instead, it is funded directly by the Federal Reserve, with a current annual limit of about $600 million.
In a new ruling, a federal appeals court in New Orleans ruled that the funding violates the Constitution's Appropriations Clause because it improperly shields the CFPB from congressional oversight.
The U.S. Chamber of Commerce and some other business officials supported payday lenders, but mortgage banks and other sectors regulated by the CFPB urged the court to avoid a broad ruling that could sway the market. warned.
In 2020, the court decided on another CFPB case, ruling that Congress had improperly blocked the director's removal. The justices said the director could be replaced at the president's will, but allowed the agency to continue operating.
___
Follow AP coverage of the U.S. Supreme Court at https://apnews.com/hub/us-supreme-court.
