UnidosUS Issues Statement on the Constitutionality of CFPB Funding
WASHINGTON, DC— The Supreme Court announced it will review the Fifth Circuit’s outlier decision, Consumer Financial Services Association of America v. Consumer Financial Protection Bureau, overturning the funding for the Consumer Finance Protection Bureau (CFPB) on constitutional grounds and invalidating its payday lending rule. Laura MacCleery, Senior Policy Director, UnidosUS, issued the following statement in response to the announcement:
“On the heels of the financial crisis, and with the economy in tatters, Congress established the CFPB in 2011. UnidosUS proudly advocated for its creation because its mandate includes ‘ensuring that all consumers have access’ to financial products that are fair, transparent and competitive.
“As a civil rights organization, we saw that the CFPB could—and does—democratize consumer safeguards, bringing a renewed focus to scams and schemes that target middle- and lower-income people, including those who are unbanked or non-English speakers, as well as youth and immigrants. Among the first rules the new Bureau tackled were those to help address unfair practices on remittances and credit card scams targeting students.
“At a time when Latino purchasing power is approaching $2.6 trillion, this kind of oversight and rapid response is essential for harnessing the economic prosperity, contributions and mobility of Latinos, who, as a community, are too often targeted by the most predatory actors in the financial sector.
“When the CFPB was created after the financial crisis, it was asked to bring transparency and fairness to financial products and services offered by financial institutions and other companies, creating compliance certainty and preventing unfair competition. At that time, Congress transferred functions to the CFPB that were previously handled by the banking agencies and determined that the CFPB needs the same steady, dependable funding structure. Congress also made the decision to give the CFPB the same funding mechanism as the Federal Reserve to provide funding stability and an ability to perform these functions without interruption and with certainty, given their clear importance.
“Financial regulators are generally funded in this manner because it helps to assure the continuity of regulations that keep the economy stable. The Senate Banking Committee explained at the time that ’the assurance of adequate funding, independent of the Congressional appropriations process, is absolutely essential to the independent operations of any financial regulator,’ citing the ’hard learned lesson’ from the under-funding of the predecessor to the Federal Housing Finance Agency.
“The prospect of a non-functioning CFPB poses a severe risk to businesses. The rules of the road that the Bureau establishes supersede a large number of inconsistent regulatory approaches at the state level, thus creating compliance certainty and a body of national law. Returning abruptly to a patchwork system would introduce major uncertainties, threatening the legality of dozens of exemptions and practices that companies rely on every day.
“The CFPB, like many other federal entities, was carefully designed to meet a need shared by many Americans, including lower- and middle-income consumers, as well businesses both large and small. Its capacity to fulfill its charge depends upon a structure embodying subtle but essential values embedded by Congress and shared across many agencies—including predictability, certainty and the stability of the financial marketplace and many of its regulators. Let’s hope that the Supreme Court allows common sense to prevail.”