Supreme Court Rules in CFPB’s Favor 

May 21, 2024

On May 16,
the Supreme Court ruled that the Consumer Financial Protection Board’s (CFPB’s) funding mechanism is constitutional.

  • Specifically, the Court found that CFPB funding through the Federal Reserve (rather than annual appropriations by Congress) is valid under the U.S. Constitution’s appropriations clause in CFPB v. Community Financial Services Association of America.
  • In any given fiscal year, the CFPB can utilize a maximum of 12% of the Fed’s total operating expenses as reported in 2009 and adjusted for inflation. However, Bloomberg reports that the CFPB is getting close to its funding cap.

Why it matters: As reported by Bloomberg, this ruling “ends legal threats to the CFPB’s very existence that have percolated through the courts since Congress created the agency in the 2010 Dodd-Frank Act.”

Market participants believe that this ruling clears the way for a more aggressive CFPB, which has been relatively subdued with only four public enforcement cases in 2024.

What’s next: Litigation related to rules that were on pause will likely start moving forward, including:

  • 1071 Reporting: The small business lending data collection rule has been on hold since last October. Under the final rule, lenders have to collect and report loan application and origination data to small businesses, which, according to the CFPB, includes CRE mortgages;
  • Credit card late fee cap, which was paused in early May.

However, before these rules can be implemented, the CFPB will have to ask the courts for existing injunctions to be lifted. As reported by Bloomberg, “industry group plaintiffs that sued to block the rules will have the chance to ask for fresh injunctions on substantive grounds.”

Please contact Sairah Burki (sburki@crefc.org) or David McCarthy (dmccarthy@crefc.org) with questions.

Contact 

Sairah Burki
Managing Director, Head of Regulatory
Affairs & Sustainability
703.201.4294
sburki@crefc.org

David McCarthy
Managing Director, Chief Lobbyist, 
Head of Legislative Affairs
202.448.0855
dmccarthy@crefc.org
powerful regulator
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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