Mon. May 20th, 2024

From today’s Politico News:

Democrats who created the Consumer Financial Protection Bureau a decade ago thought they could shield the agency from political pressure by funding it through the Federal Reserve instead of Congress.

That decision, which drew condemnation from GOP lawmakers and has helped make the regulator a lightning rod for attacks ever since, is facing its biggest test Tuesday when the Supreme Court hears arguments on its constitutionality.

The case is highly anticipated since it could not only result in curbing the agency’s power and throwing its rules into question but potentially affect other regulators throughout the government — including the Fed and the FDIC — that are also not funded by annual congressional spending bills.

“The CFPB has returned $17 billion directly to Americans cheated by financial institutions,” Sen. Elizabeth Warren (D-Mass.) told POLITICO. “If the Supreme Court disregards over a century of legal precedent, it risks undermining banking regulators safeguarding our economy, as well as Social Security and Medicare.”

Warren, who is credited with conceiving the agency that was created in the wake of the 2008 financial crisis before she became a senator, said the CFPB’s political independence was critical to its formation. Republicans and financial industry critics, many of whom have opposed the bureau since its inception, argue that the funding scheme allows the agency to escape accountability.

Many Democrats see the case as part of a broad-based attack on the regulatory state by Republicans eager to bring challenges before the Supreme Court, whose conservative majority has proved willing to curtail the power of agencies.

In a 2022 ruling limiting the Environmental Protection Agency’s authority to regulate greenhouse gases, the high court’s six GOP-appointed justices invoked the so-called major questions doctrine, saying that agencies like the EPA need congressional approval before “asserting highly consequential power.” The court has also taken up a case this term challenging the constitutionality of the Securities and Exchange Commission’s in-house enforcement proceedings.

Read the complete story here.

By Editor