Trump Gag Order Issued, Is This Wrong?

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During Tuesday’s oral arguments, the Supreme Court justices seemed reluctant to declare the funding structure of the Consumer Financial Protection Bureau (CFPB) unconstitutional.

This case represents one of the most significant challenges to the CFPB since its creation over ten years ago. However, both liberal justices and some conservatives expressed doubts about the claims made by two lender trade groups, which argue that the bureau’s funding method infringes on Congressional financial authority.

Conservative Justice Amy Coney Barrett questioned the trade groups’ attorney, seeking clarity on their proposed standard.

The CFPB, initially proposed by Sen. Elizabeth Warren (D-Mass.), was created under the Dodd-Frank Wall Street reform act. Its primary role is to address predatory lending and enforce consumer protection laws, especially after the 2008 financial meltdown.

Unlike other agencies, the CFPB’s funding doesn’t come from yearly appropriations. Instead, it gets a set amount, adjusted for inflation, from the Federal Reserve’s earnings on government securities. In fiscal 2022, the CFPB was allocated $641.5 million, which was below its limit of $734 million.

Many Republicans have criticized this funding approach, arguing that it reduces Congress’s oversight of the independent bureau.

Justice Brett Kavanaugh, a conservative, pointed out that Congress has the power to modify the funding structure, emphasizing that “Congress could change it tomorrow.”

Even Justice Clarence Thomas, another conservative, occasionally expressed reservations about the trade groups’ stance.

Thomas acknowledged the uniqueness of the CFPB’s funding but added, “Just because it’s unprecedented doesn’t make it unconstitutional. We need a more precise argument from you.”