A Court of Appeals has just struck down the Constitution on the Consumer Financial Protection Bureau. And after?

When the Founding Fathers™ structured our form of government, they ordered it around one of the most influential obstacles to efficiency known to man besides Netflix: the separation of powers. The whole point of our constitutional scheme – breaking up and delegating authority between the legislature, judiciary, executive and people – was to create just enough redundancy and internal conflict so that not too much was done in a little of time. This grand objective sometimes comes at the expense of the governing bodies themselves.

A federal appeals court has ruled that the funding structure of the nation’s most powerful financial watchdog agency, the Consumer Financial Protection Bureau, is unconstitutional…how the bureau is funded “violates the structural separation of powers of the Constitution”.

The reason for the judgment? It’s all about the power of the stock market – a power traditionally understood to belong to Congress.

[T]he [B]ureau receives its funding from the Federal Reserve, not Congress. It is this part of its structure which, according to the court, violates the Constitution.

“While the vast majority of executive agencies depend on annual appropriations for funding, the Bureau does not,” said the the judges wrote. “Where ever the line is between a constitutionally funded agency and an unconstitutional agency, this unprecedented arrangement crosses it.”

This result is one of those weird times when you actually have to pay attention to things that… go easier if you don’t. For example, the Constitution delegates to Congress the exclusive power to declare acts of war. But war tends to be one of those things that gives strategic advantages to those who launch the first strike or operate under cover of darkness – formal statements like this rob you of the advantage. This is why it would be difficult not to assume that, despite the clear constitutional delegation, the executive Most likely did a few things regarding foreign object conflict that Congress has not – at least publicly – explicitly endorsed or declared. I imagine that borderline schemes which may or may not constitute acts of aggression, say espionage or using social media to undermine democratic processeswould have almost as much force if brazenly heralded by Nancy Pelosi.

You get my point; crossing the lines of constitutionality have far more precedent than meets the eye. For example, if the CFPB’s funding crosses the line, what about the Federal Reserve and the Federal Deposit Insurance Corporation, as argued by the lawyers in court? Decisions like that really get into the inner baseball or sausage making of our governance in such a way that if we really stick to the rules in the book, we might end up damaging the game itself.

In the meantime, he says it raises doubts about all sorts of other rules the bureau has put in place, because at least in the 5th Circuit region — Texas, Louisiana and Mississippi — other CFPB rules could be challenged. by similar lawsuits.

“There’s going to be a lot of confusion about whether the rules associated with mortgages, debt collection, credit cards are still viable rules in the Fifth Circuit.”

If the decision is ultimately upheld, it could mean the bureau would have to get an annual budget approved by Congress, which Peterson said would leave it vulnerable to “banks, payday lenders and debt collection agencies that are incredibly good at pressure Congress to weaken consumers. protections.

The future consequences of this decision remain unclear. Because they are not directly funded by Congress, will Medicare and Social Security be at risk? That’s what happens when you pay attention to the man behind the curtain – things no longer make sense.

Court of Appeal Rules CFPB Financial Supervisory Agency Structure Unconstitutional [NPR]


Chris Williams became social media manager and associate editor for Above the Law in June 2021. Prior to joining the team, he moonlighted as an underage Memelord™ in the Facebook group. Law school memes for Edgy T14s. He endured Missouri long enough to graduate from Washington University at St. Louis School of Law. He’s a former boat builder who can’t swim, a published author on critical race theory, philosophy and humor, and has a love for cycling that sometimes annoys his peers. You can reach him by email at [email protected] and by tweet at @WritesForRent.

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