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It's primary gimmick is the following: it isn't dependent on funding from US Congress. At one time, it even used to be independent of the US Executive Branch until a court ruling in 2016 that the US President could fire the head of the agency.
A three-judge panel on the 5th Circuit Federal Court of Appeals ruled this week that the CFPB's structure is unconstitutional because Congress has no control over the agency's budget, which is funded entirely by the Federal Reserve. Under the terms of Dodd-Frank, the CFPB is entitled to receive a budget totaling up to 12 percent of the Federal Reserve's annual operating expenses, and the Federal Reserve is not allowed to refuse the CFPB's requests for funding.
Now, that funding model has been used to reverse a ruling by the CFPB as unconstitutional with the potential to put all its rulings since formation into question on the same constitutional basis.
Why it matters: The reasoning behind the ruling, if upheld, could potentially invalidate all the rules enacted by the CFPB over its 11-year existence — including regulations underpinning the U.S. mortgage system.
This is one of the big reasons I oppose the passing of bad law even when it serves a concrete good. It can take a long time to fix the massive problems that such law brings.
And note that a key argument by the court was that there was no precedent for the CFPB's unconstitutional structure. If there had been other agencies with similar setups, this could have been very hard to overturn. Similarly, the CFPB is a precedent for future breaking of the US Constitution along these lines. Without the ruling, there would have been a stronger case for future misdeeds of this sort.
(Score: 0) by Anonymous Coward on Sunday October 23 2022, @03:01PM
Repeating the same nonsense doesn't make it true.
There is one, and only one, type of appropriation that every Congress must consider. That is appropriations to support armies, which must be considered every two years. Otherwise, Article I does not place limits on the length of appropriations or the mechanism involved.
Here is the actual ruling: https://aboutblaw.com/5mY [aboutblaw.com]. It attempts to address this issue:
Much like your posts, this is also nonsense. There are specific restrictions on the types of laws Congress can pass, and this is in Article I, Section 9. Moreover, Article I, Section 8 limits the authority of Congress by listing the legislative powers granted to Congress. Contrary to what the ruling states, a law could be unconstitutional because it explicitly violates the restrictions in either of these sections, regardless of the ability of Congress to later repeal an unconstitutional law. However, neither of those conditions are satisfied in this instance. The argument made by the judges is, at best, quite misleading.
Instead, this court arbitrarily imposed limitations on the mechanisms that Congress can use to appropriate funds beyond what is stated in the Constitution. This ruling violates the separation of powers and is an unconstitutional action taken by these judges.