Facts of the Case

Provided by Oyez

In response to the financial crisis around 2007, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, which, among other things, authorized the creation of the Consumer Financial Protection Bureau (CFPB) as an independent agency within the Federal Reserve. The CFPB was tasked with writing and enforcing rules for financial institutions, examining financial institutions, monitoring and reporting on markets, and tracking consumer complaints.

In 2017, the CFPB adopted a rule that prohibited lenders from further attempting to withdraw funds from borrowers’ bank accounts after two consecutive attempts failed for lack of funds.

A group of lenders sued the CFPB over that rule, arguing that the agency’s funding scheme was unconstitutional. Instead of receiving money allocated to it each year by Congress, as most agencies do, the CFPB receives funding directly from the Federal Reserve, which collects fees from member banks. The district court concluded the funding scheme was not unconstitutional, but the U.S. Court of Appeals for the Fifth Circuit reversed.


Questions

  1. Does the funding scheme for the Consumer Financial Protection Bureau, which receives funding directly from the Federal Reserve, violate the Appropriations Clause of the Constitution?