WASHINGTON — An appeals court ruling that the Consumer Financial Protection Bureau’s funding structure is unconstitutional raises the stakes in a long battle over the agency, potentially setting the stage for a test the Supreme Court sidestepped only two years ago when it declined to find the entire agency unconstitutional.
A three-judge panel of the 5th U.S. Circuit Court of Appeals last week vacated a 2017 CFPB payday lending rule, saying the agency’s funding is unconstitutional because it draws money from the Federal Reserve, insulating it from congressional oversight.
The decision is not only expected to make it harder for the CFPB to enforce rules, at least temporarily, but it also opens up the prospect of widespread disruption in a regulated area of the economy and potentially a need for Congress to step in and resolve the funding issue.
