The Supreme Court released the equivalent of its game schedule for the 2023-24 term last week and is starting the season off with a banger. Arguments in the case debating whether the funding structure of the Consumer Financial Protection Bureau is constitutional will be heard October 3, and while a ruling will not be expected until 2024, it sets the scene for the latest important legal battle facing the Bureau.
The case revolves around a small-dollar lending rule introduced by the CFPB in 2017, which drew significant opposition from the payday lending industry. The Community Financial Services Association of America and Consumer Service Alliance of Texas filed a lawsuit, arguing that the CFPB’s payday rule was implemented arbitrarily, exceeded statutory authority, and violated the Constitution.
In October, the Fifth Circuit Court of Appeals ruled in favor of the plaintiffs, stating that Congress had violated the Constitution’s separation of powers by relinquishing its appropriations power to the Bureau. This ruling nullified the small-dollar lending rule but left other challenges unaddressed.
However, in March, the Second Circuit Court of Appeals contradicted the Fifth Circuit’s ruling, stating that there was no basis in Supreme Court precedent to support the claim that the Bureau’s funding structure was unconstitutional.
In February, the U.S. Supreme Court agreed to hear the case but denied the CFPB’s request to expedite it. The oral arguments are scheduled for October, and a final ruling is expected in early 2024.
Briefs in support of the CFSA were filed last week, including one by ACA International.