CFPB Responds to TransUnion Motion by Blasting Fifth Circuit Ruling

The ruling from the Fifth Circuit Court of Appeals doesn’t “make sense” and is “without support in law,” the Consumer Financial Protection Bureau argues in a response to a motion for supplemental authority that was filed by TransUnion as it seeks to use the ruling to get a lawsuit filed by the CFPB against the credit reporting giant dismissed. The filing marks the first official response from the CFPB to the ruling from the Fifth Circuit, which determined that the funding structure used to run the Bureau is unconstitutional.

A copy of the CFPB’s response in the case of Consumer Financial Protection Bureau v. TransUnion can be accessed by clicking here.

The Bureau filed its lawsuit back in April, accusing the credit reporting agency and one of its executives of violating an earlier enforcement order that prohibited the company from engaging in deceptive marketing of the credit-related products it sells. TransUnion last week filed a notice of supplemental authority, seeking to make sure that the judge in its case saw the ruling from the Fifth Circuit. The CFPB filed its response to that notice on Tuesday, arguing that the ruling “does not help” TransUnion’s defense.

“The Fifth Circuit’s decision is without support in law,” wrote Eric Halperin, the CFPB’s Enforcement Director, David Rubenstein, the Deputy Enforcement Director, and Cynthia Goosen Lesser, the Assistant Deputy Enforcement Director. “The court mustered no case from more than 230 years of constitutional history that has ever held that Congress violates the Appropriations Clause or separation of powers when it authorizes spending by statute, as it did for the Bureau. The panel acknowledged that every other court to address the Bureau’s funding has upheld it.”

The document goes on to say that the decision doesn’t make sense because its contention that the CFPB’s funding was double insulated from Congressional oversight was incorrect because “Congress is fully capable of overseeing the Bureau’s spending, including because of several provisions in the Bureau’s statute that ensure its ability to supervise,” it wrote.

“The Court should reject the Fifth Circuit’s analysis and instead join every other court to address the issue — including the en banc D.C. Circuit — in upholding the Bureau’s statutory funding mechanism,” it concluded.