In a decision handed down last week, the U.S. Supreme Court ruled in favor of the Consumer Financial Protection Bureau (CFPB), thus avoiding what could have been a potential catastrophe for the consumer finance watchdog. The lawsuit, brought forward by the payday loan industry, had challenged the Bureau’s independent funding structure, which in turn might have undermined its existence and questioned the legality of the enforcement actions it has carried out since its establishment.
As detailed in this
National Law Journal article, the payday loan industry’s case threatened the CFPB’s ability to draw its funding from the Federal Reserve system, and additionally questioned the legality of the billions of dollars in enforcement actions that the Bureau has executed since its creation following the 2008 financial crisis.
With this Supreme Court decision, the CFPB is now buffered against such constitutional attacks every time they implement a regulation, as commented by Attorney Dennis Merkley. However, the future may still hold other challenges for the regulator, as the landscape of consumer finance continues to evolve.