Second Circuit Rules CFPB Constitutionally Funded, Creates Circuit Split

On Thursday March 23, 2023, a three-judge panel of the Second Circuit unanimously ruled that the Consumer Financial Protection Bureau's (CFPB) funding structure is constitutional, creating a circuit split between the Second Circuit and the Fifth Circuit on the issue. CFPB v. Law Offices of Crystal Moroney, P.C., No. 20-3471 (decided March 23, 2023) ( Opinion). The panel's opinion is timely, as the U.S. Supreme Court last month agreed to hear the agency's appeal of the Fifth Circuit decision on the same issue.

In the Second Circuit's decision, the panel held that there was no support for the Fifth Circuit's earlier conclusion that the CFPB's funding through the Federal Reserve - rather than annual spending bills - violates the Constitution's Appropriations Clause. In Community Financial Services Association of America Ltd et al. v. CFPB, the Fifth Circuit held that the CFPB's funding structure "cannot be reconciled with the Appropriations Clause and the clause's