Supreme Court’s CFPB Ruling a Victory For Consumers

Today, the U.S. Supreme Court has upheld the constitutionality of the funding structure of the Consumer Financial Protection Bureau (CFPB), rejecting the radical and baseless arguments of payday lenders seeking to cripple the agency and evade its oversight.

Congress created the Bureau after the 2008 Financial Crisis to reign in excesses and illegal practices at financial companies that were harming consumers and the entire economy as a whole. Since its creation, the CFPB has returned more than $19 billion to consumers who have been subject to fraud, abuse, exploitation, and discrimination by unscrupulous banks, lenders, and financial firms. Additionally, to deter fraud and abuse in the financial marketplace, companies which have cheated consumers have paid over $3.7 billion dollars in fines.

The Court’s decision concerns a lawsuit brought against the Bureau by the Community Financial Services Association, a lobbying organization for payday lenders, to block a CFPB rule which would have forbidden payday lenders from withdrawing funds from a consumers’ accounts after two failed attempts. The lenders argued that the Bureau lacked authority because the funding for the agency was unconstitutional, even though the Bureau is funded similarly as the Federal Reserve and other financial regulators.

Although the lenders’ convinced the Fifth Circuit Court of Appeals–which is notoriously hostile to consumer protections–the Supreme Court has rejected their crass and dangerous arguments, which were an obvious ploy to eliminate all manner for financial protections for consumers so they could act with impunity. Political opponents of the CFPB have regularly sought to defang the Bureau and inhibit its work by attacking the Bureau’s budget, and so the Supreme Court’s ruling puts an end to a longtime talking point of Bureau opponents.

“Today’s Supreme Court decision is a major victory for everyday people across the country,” said Spencer Watson, Executive Director for Center for LGBTQ Economic Advancement & Research. “The ruling ensures that the CFPB’s work to protect consumers from abuse and discrimination at the hands of financial firms will continue, which promotes a safer and healthier financial marketplace for everyone. This is particularly good news for members of communities which have disproportionately been excluded from or exploited by the financial industry, including low-income people, people of color, women, and LGBTQ people.”