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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 Monday October 24 2022, @08:37AM
Once again, the revenue stream is perpetual only until Congress chooses to amend or repeal the law authorizing the payments. Any future Congress can take up the matter whenever they choose by passing legislation that will modify or eliminate the revenue stream.
It is your opinion that the CFPB's funding is not legitimate. However, nothing in sections 8 and 9 of Article I restrict the length of appropriations with a single exception. We've already covered that exception, which limits appropriations for armies to two years in duration. There are no other restrictions imposed on how Congress may authorize appropriations. Here are the only places where appropriations are mentioned in Article I:
Neither of these restrict the length of appropriations except to fund armies. Restrictions on the length of appropriations are not imposed elsewhere in the Constitution, either. No other articles of the Constitution mention appropriations as this power is reserved solely for Congress. The court is imposing an arbitrary restriction on the length of appropriations even though Article III does not grant the judiciary any powers here. This ruling violates the separation of powers and amounts to legislating from the bench.
Again, if the Constitution restricted the length of appropriations for entities like the CFPB, you would certainly have said where in the Constitution this restrictions is imposed. Because you have not done so after multiple replies, we can reasonably conclude that you are full of shit and talking out of your ass.