Fifth Circuit Ruling Chills Consumer Financial Protections

In Community Financial Services Association of America v. CFPB, a three-judge panel for the US Court of Appeals for the Fifth Circuit became the first federal court to find that the Consumer Financial Protection Bureau's funding structure is unconstitutional.

This ruling threatens to undo many, if not all, of the bureau's past actions, and may make it impossible to perform its responsibilities under the Consumer Financial Protection Act. It also raises the possibility of future litigation against similarly funded agencies.

The CFPB is an independent bureau in the Federal Reserve System. One way Congress sought to promote the CFPB's independence was funding it outside the appropriations process, as it did with other independent agencies such as the FDIC and Office of the Comptroller.