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Boston Herald
Boston Herald
12 Jul 2023
Matthew Medsger


NextImg:Consumer Financial Protection Bureau unconstitutional, legal group tells high court

Bay State Sen. Elizabeth Warren’s brainchild is coming under attack.

A Massachusetts-based civil rights organization has filed a brief with the U.S. Supreme Court arguing that the Consumer Financial Protection Bureau is unconstitutional as established, too powerful, and must be reined in under congressional control.

According to an amicus friend-of-court brief filed by the New England Legal Foundation with the high court, the fact that the agency wields such “extraordinary” power without needing to go through Congress for funding is plainly at odds with the law.

“If there is an agency with such extraordinary power, they should be subjected to a higher level of judicial review, and where Congress has less of a role the judicial branch should have more of a role,” Dan Winslow, NELF president, told the Herald. “This agency has an extraordinary concentration of power without the usual congressional checks and balances.”

The Consumer Financial Protection Bureau is Warren’s baby that came to be in 2010 after former President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The agency is ostensibly responsible for promoting “fairness and transparency for mortgages, credit cards, and other consumer financial products and services.”

That mission may be important or even necessary, but Winslow said the fact of the matter is that the law creating the agency also placed it outside of any congressional review of its budget, despite the Constitution ceding the government’s power of the purse to the legislative branch.

“We are non-partisan, we don’t care what the policy is. We don’t take a view on the pros or cons of the CFPB,” Winslow said. “We just want the government to follow the law.”

In the case of Consumer Financial Protection Bureau v. Community Financial Services Association of America Ltd., a financial services company sued the government over the CFPB’s regulation of the payday lending industry.

A court in Texas said the payday lending rules were fine and found for the government.

The Fifth Circuit Court of Appeals agreed with the payday lending rule’s legality, but noted the agency issuing it was funded directly through the Federal Reserve, instead of through Congress. The appeals court found that funding mechanism unconstitutional, but the Biden Administration appealed to the Supreme Court, who will hear arguments this fall.

NELF, in filing their brief, joins 27 state attorneys general and more than 100 members of congress in asking the high court to end the organization’s funding scheme and bring it under the control of elected representatives in Congress.

“Our nation was founded in rebellion to a King, so our constitutional fabric is woven to protect all citizens from an Executive branch that concentrates power and evades public accountability through our elected representatives,” Winslow said. “NELF’s mission includes advocacy for the rule of law and we are hopeful the Court will agree and require this federal agency’s funding to be subject to congressional oversight.”

The brief was prepared for NELF by Mark Perry, Josh Wesneski, and Mark Pinkert from the law firm Weil, Gotshal & Manges. The firm said in a statement they are “proud” to work with NELF on “these fundamental issues of separation of powers with the Court.”

Senator Warren’s office did not respond to a request for comment on the case or the brief.