By Charlene Crowell –
In its 7-2 ruling, the US Supreme Court gave consumers a long-sought victory that ended more than a decade of challenges over the constitutionality of the agency created to be the nation’s financial cop on the beat.
The decision in the case, formally known as Consumer Financial Protection Bureau v. Community Financial Services Association of America LTD, ET AL, refuted arguments by the billion-dollar payday lending industry that CFPB was unconstitutional because its funding is derived directly from the Federal Reserve instead of Congress’ annual appropriations. The majority opinion, written by Justice Clarence Thomas, concluded, “The statute that authorizes the Bureau to draw money from the combined earnings of the Federal Reserve System to carry out its duties satisfies the Appropriations Clause.”
Two additional concurring opinions underscored this conclusion. Justice Ketanji Brown Jackson, the first Black woman to serve on the Supreme Court and its newest member, addressed why legislators created the CFPB.
“As the Court explains, in response to the devastation wrought by the 2008 financial crisis, Congress passed and the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act… Drawing on its extensive experience in financial regulation, Congress designed the funding scheme to protect the Bureau from the risk that powerful regulated entities might capture the annual appropriations process,” wrote Justice Jackson.
During the Financial Crisis, millions of Black and Latino borrowers suffered home foreclosures because they were targeted with high-cost, unsustainable mortgage loans, even though many were eligible for other lower-cost loans. But those were not the only predatory financial product foisted upon people of…
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