Center for Political Awareness

US Supreme Court Sides with Agency Curbing Predatory Lending Despite Conservative Challenge

Court upholds funding design of Consumer Financial Protection Bureau, which was under challenge by payday loan industry.

Photo: A customer leaves a payday loan store in Gaithersburg, Maryland. Photograph: The Washington Post/Getty Images

 

The US supreme court on Thursday upheld the Consumer Financial Protection Bureau’s funding mechanism in a challenge brought by the payday loan industry, handing a victory to Joe Biden’s administration and a setback to the agency’s conservative critics.

The 7-2 decision reversed a lower court’s ruling that the CFPB’s funding design –drawing money each year from the Federal Reserve instead of from budgets passed by lawmakers – violated a provision of the US constitution giving Congress the power of the purse.

Clarence Thomas, who wrote the ruling, said that the CFPB’s funding design complied with the constitution’s “appropriations clause”, which vests spending authority in Congress.

“Under the appropriations clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes,” the conservative justice wrote. “The statute that provides the bureau’s funding meets these requirements.”

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