Two of the Supreme Court’s most conservative justices deviated from other right-leaning members in a decision to keep the Consumer Financial Protection Bureau (CFPB), but a third led the majority judgment that sided with the Biden administration.
Justices Samuel Alito and Neil Gorsuch dissented from the Supreme Court’s 7-2 ruling preserving the agency’s funding method as constitutional, arguing that the decision undermines Congress’s most “complete and effective weapon”: its control of the purse.
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“Unfortunately, today’s decision turns the Appropriations Clause into a minor vestige,” Alito stated. “The Court upholds a novel statutory scheme under which the powerful Consumer Financial Protection Bureau (CFPB) may bankroll its own agenda without any congressional control or oversight.”
Congress granted the CFPB the authority to withdraw funds from the Federal Reserve System that its director determined were “reasonably necessary to carry out,” unlike most other federal agencies that rely on annual appropriations for funding. That funding system has long made the CFPB the focus of Republican assaults, claiming that Congress has too little influence over the agency.
“The Framers would be shocked, even horrified, by this scheme,” concluded Alito.
Justice Clarence Thomas, one of the Supreme Court’s most conservative members, wrote the majority opinion, marking a separate and notable departure among the justices. Chief Justice John Roberts, conservative Justices Brett Kavanaugh and Amy Coney Barrett, and the three liberal members of the Supreme Court joined him.
“Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes,” wrote Thomas.
“The Act that authorizes the Bureau’s funding fits these criteria.” We thus conclude that the Bureau’s funding mechanism does not violate the Appropriations Clause,” he added.
In the majority judgment, Thomas specifically addressed points advanced by the dissenting judges, with whom he frequently agrees. He said that, while Alito and Gorsuch disagree with the majority’s definition of “appropriations,” they never provide a “competing understanding” of what it means.
“The dissent’s rendition of history largely ignores the historical evidence that bears most directly on the meaning of ‘Appropriations’ at the founding—ppreratification appropriations laws,” wrote Thomas.
The justices’ decision brings to an end a struggle that posed the CFPB’s most serious legal challenge since its inception in the aftermath of the 2008 financial crisis to combat predatory lending and enforce consumer protection laws.
Two banking trade associations filed the challenge to its funding system, and all of the nation’s Republican state attorneys general supported it.
