NEW YORK–Ahead of a Supreme Court case that challenges the CFPB’s funding, the U.S. Court of Appeals for the Second Circuit has ruled the Bureau’s independent funding through the Federal Reserve is constitutional.
The unanimous ruling from the three-judge panel involved a case where a New York debt collection law firm, the Law Offices of Crystal Moroney PC, was seeking to escape a civil subpoena the CFPB issued in June 2017. A lower court ruled in the CFPB’s favor in August 2020, according to Bloomberg Law.
“The law firm argued in part that the CFPB’s funding through the Fed and outside of the Congressional appropriations process violates the Constitution’s Appropriations Clause and nondelegation doctrine,” Bloomberg Law reported. “The Second Circuit panel rejected that argument.”
SCOTUS to Hear Case
As CUToday.info has reported, the Supreme Court is set to hear arguments in its October term related to the CFPB’s appeal of an October 2022 ruling in the U.S. Court of Appeals for the Fifth Circuit that found the CFPB’s funding violates the Constitution and the agency should be subject to congressional appropriations.
In its ruling, the Second Circuit said in its Thursday ruling that “cannot find any support” for the Fifth Circuit’s ruling on the CFPB’s funding in Supreme Court precedent, according to Bloomberg Law.
Prior Ruling
As CUToday.info also reported, the Supreme Court ruled in June 2020 in Seila Law LLP v. CFPB that the single-director leadership structure where the president could only fire the CFPB director for “inefficiency, neglect of duty, or malfeasance in office” violated the Constitution’s separation of powers doctrine and fixed the problem by making the director an at-will employee of the president.
That decision did not address the question of funding.
Judge Richard J. Sullivan wrote the opinion with Judges Amalya L. Kearse and John M. Walker Jr. signing on.