ARLINGTON, Va.–NAFCU staff will join many others in the country today in being “glued” to their monitors in listening to the broadcast of the Supreme Court case hearing today on the constitutionality of the funding of the CFPB.
But court-watchers should be careful before reading too much into the questions asked by justices during the hearing, NAFCU Director of Regulatory Affairs Ann Petros cautioned.
As CUToday.info has been reporting, the Supreme Court today will hear arguments in a case brought by the payday lending industry that challenges the constitutionality of the CFPB, as its budget is provided by the Fed and comes outside the congressional appropriations process. The case’s outcome has significant outcomes regardless of how it is decided, but a Supreme Court ruling that finds the funding mechanism to be unconstitutional would have the most far-reaching consequences, given its numerous rules and rulings.
In July, NAFCU, CUNA, and the American Association of Credit Union Leagues (AACUL) filed a joint amicus brief in support of CFSA, urging the Court to uphold the U.S. Fifth Circuit Court of Appeals ruling that the CFPB’s funding structure is unconstitutional.
Particular Attention
Petros said she and NAFCU will be paying particular attention to arguments related to the double-insulation concept, as well as potential effects on other agencies such as NCUA and the banking regulators, which are also funded outside the congressional appropriations process.
“The biggest focus in our amicus brief was on the impact a potential decision the funding structure is unconstitutional is going to mean exactly for the CFPB's rulemaking to date and their enforcements and supervisory authority,” said Petros. “We will be very glued to our monitors listening to oral arguments and we'll provide our members with an update following the arguments.”
The A&Q: Answers from Questions
While many Supreme Court watchers try to discern the direction in which the court is leaning in a case depending on the questions they ask during a hearing, Petros said those questions “may not necessarily indicate how the justices will ultimately land on the case and the issues before them.
“However, I think you can glean a little bit into their thinking based on the questions that they're asking,” Petros continued in response to a question from CUToday.info. “For example, if the questions are focused on the appropriate remedy and the impact, you know the justices may be concerned about broader implications from a ruling that the funding structure is unconstitutional. I think there are a number of legal experts out there that are actually thinking the Supreme Court is going to disagree with the Fifth Circuit and decide that Congress intentionally structured the CFPB outside of appropriations; that it was their decision and they shouldn't weigh in.
“However, they didn't grant cert in this case, so I think the question is broader than just that.”
In the end, when it comes to the questions posed during a hearing, Petros said, “You can read a little bit into it, but I wouldn't put too much stock into the questions because ultimately it's a guessing game and we'll just have to wait and see what the decision looks like in the Spring.”
Other Cases Being Watched
Petros said NAFCU is also watching other Supreme Court cases, in particular the challenge to the Federal Reserve’s Reg II, which would have implications for the Administrative Procedures Act and the statute of limitations in a case that involves debit interchange.
That case, said Petros, also has the potential to create significant implications, including new lawsuits related to numerous other issues.
CUToday.info has additional details here.
Also Watching Case Closely
Separately, the Virginia Credit Union League said it will also be “closely watching” the Supreme Court hearing today.
The VCUL said it supports subjecting the CFPB to the regular congressional appropriations process, as well as the transition of the CFPB’s leadership structure from the current single-director model to a multi-member commission.
“Credit unions are too often swept into one-size-fits-all regulation by the CFPB that harms credit union members and restricts credit unions’ ability to provide consumer-friendly products and services to their members,” said league President/CEO Carrie Hunt. “We supported efforts to challenge the CFPB in the courts and we remain supportive of legislative efforts to reform the CFPB and increase its transparency and accountability to both financial institutions and consumers.”
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