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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 Thursday October 27 2022, @08:56PM (2 children)
Why? It's no different than giving the judges lifetime appointments. That's a complete bypass of "democracy". Let's sunset that first
(Score: 1) by khallow on Friday October 28 2022, @01:56AM
Which are allowed by the Constitution. Further, Judges can be impeached and removed by an elected Congress, for example. There's no explicit allowance in the Constitution to remove the head of the CFPB, remember? To do that, you basically have to revoke the charter of the CFPB first.
Funny how you just can't think about why this anti-democratic stuff sucks so much. Remove that programming and think for yourself!
(Score: 1) by khallow on Sunday October 30 2022, @04:04AM
Also, let us note that lifetime appointments is centuries old. They've had a long time to work out the problems.
Creating a permanent bureaucracy that deliberately bypasses what we've been using for centuries is not.
And of course, this is just a lousy whataboutism. As I've noted before, whataboutisms fail when your side does worse. The CFPB is very different from a judicial branch that was deliberately set up to be independent of the other branches of government. What really is the reason for a regulatory agency to be independent of both the legislative and executive branches?