WASHINGTON (Nexstar) — After the 2008 financial crisis, Congress created the Consumer Financial Protection Bureau to protect consumers from things like excessive and predatory fees. But a new case before the US Supreme Court could gut the CFPB.
The agency regulates things like the fees payday lenders can charge borrowers. Now the payday lenders are pushing back by claiming the CFPB’s funding is unconstitutional.
“In practice, it could be rendered inoperable,” said Aram Gavoor with George Washington Law. “It’s actually drawn from a discretionary amount that the CFPB selects.”
During arguments before the Supreme Court on Tuesday, the lawyer representing the payday lenders argued the CFPB budget doesn’t have enough congressional oversight.
“At a bare minimum the appropriations clause requires Congress to determine how much the government should be spending,” a lawyer for the payday lenders said.
Without that appropriations oversight, the payday lenders say other agencies and even the White House could be given almost unlimited and unrestricted funding.
“Of course it’s a critical element of the separation of power that Congress has control over the purse,” US Solicitor General Elizabeth Prelogar said. “Our argument here is that Congress has exercised that power.”
The government maintains there is a cap on how much the CFPB can spend.
But Gavoor said many questions from the justices signal they take the payday lenders claims seriously.
“There could be tectonic shifting with regard to the relationship of federal government agencies, their authorities and the regulated public,” he said.