SCOTUS v. CFPB Could Restore Self-Government

In the Dobbs case, the U.S. Supreme Court (SCOTUS) sent abortion back to the states. In West Virginia v. EPA, the high court tackled the administrative state. In the wake of those landmarks, a key case to watch is Consumer Financial Protection Board v. All America Check Cashing, now in the Fifth Circuit. 

“A critical issue yet undecided in this appeal is whether the historically unique structure of the Consumer Financial Protection Bureau violates the Constitution because its funding is doubly removed from congressional review,” states an opinion by Judge Edith H. Jones. She holds that “the CFPB’s funding structure violates the separation of powers principle enshrined in the Appropriations Clause,” but there is more to it.

“Created in 2009 the Consumer Financial Protection Bureau is an administrative agency expressly designed to answer to neither of the politically accountable branches,” Jones explains. “Unlike other agencies, Congress put the CFPB’s staggering amalgam of legislative, judicial and executive power in the hands of a single Director serving a five-year term and removable by the President only for cause; and Congress insulated the agency from the ordinary congressional appropriations process.”

The CFPB can conduct investigations, issue subpoenas and “seek a dizzying array of penalties” including civil penalties of up to $1,190, 546 per day.” If that doesn’t deserve review by the SCOTUS it is hard to imagine what might. 

As Adam Mill notes at American Greatness, the CFPB is funded by the Federal Reserve, not through appropriations. Mill argues that the true reason for opposition to Brett Kavanaugh was his opposition to “administrative law taking on the same level of import as legislative pronouncements.” As we noted in 2019, Kavanaugh was already on record that, aside from the president, the CFPB boss is the most powerful person in the federal government. 

As this column noted in 2012, the CFPB was created during the worst financial crisis since the Great Depression, not a good time to expand government. The CFPB was based on the assumption that even informed consumers were unable to look out for themselves, and the new agency duplicated the work of existing bank regulators. As Mill explains, the CFPB is hardly the only “ghost funding” federal agency. 

The federal Department of Justice uses “assets forfeited by suspected criminals to pay its own expenses and pay bounties to local law enforcement. The Drug Enforcement Administration (DEA) “confiscates billions in forfeited funds without every charging owners with a crime.” 

In a system of self-government, Mill contends, elected members of government must control the levers of power, especially the money that funds operations. Ghost funding “severs the link between the ballot box and the terrifying power of the federal government.” It would be “almost impossible to overstate” the importance of a SCOTUS decision striking down ghost funding federal agencies. We will have to see what happens. 

K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at American Greatness.
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