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Opinion Why Americans need protection from the Consumer Financial Protection Bureau

Richard Cordray, the first director of the Consumer Financial Protection Bureau, talks with Sen. Elizabeth Warren (D-Mass.) at a White House event in 2013. (Susan Walsh/AP)
4 min

Frail humans, fallen creatures in a broken world, rarely approach perfection in any endeavor. In 2010, however, congressional majorities (including only six Republicans) created a perfectly, meaning comprehensively, unconstitutional entity. The Consumer Financial Protection Bureau also perfectly illustrates progressivism’s anti-constitutional aspiration for government both unlimited and unaccountable.

The CFPB is unlike any federal law enforcement agency ever created. Floating above the Constitution’s tripartite design of government, it is uniquely sovereign:

Independent of congressional appropriations, it funds itself by acquiring, in perpetuity, up to 12 percent of the Federal Reserve’s annual operating expenses (the CFPB’s cut might soon be $1 billion), rolling over and investing any year’s surplus. The president or either chamber of Congress can veto any attempt by legislators to gain control of the CFPB. Its director could not be removed for policy reasons, until this provision was declared a violation of the separation of powers because it reduced the president’s authority to direct the executive branch.

On Friday, the Supreme Court justices in conference will consider the CFPB’s request that the court overturn a decision by the U.S. Court of Appeals for the 5th Circuit. It struck down a particular rule issued by the CFPB. The 5th Circuit argued that the rule was issued by the CFPB director while he was unconstitutionally insulated from presidential removal. And that the rule was promulgated by spending funds in violation of the appropriations clause (“No money shall be drawn from the Treasury, but in consequence of appropriations made by law”).

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In 2010, Congress gave a new law enforcement agency a blank check — forever. If Congress can cede funding of the CFPB to the CFPB, what limiting principle would prevent Congress from nullifying the appropriations clause by allowing the entire executive branch to fund itself in perpetuity, thereby abandoning the controlling power of the purse?

The Supreme Court should give the CFPB a reason to remember the adage “be careful what you wish for.” The court should grant the CFPB’s request and hear its challenge to the 5th Circuit. And the court should hold that the CFPB’s power to set its own budget results from Congress’s violation of the non-delegation doctrine: Congress cannot delegate to others powers the Constitution vests exclusively in it.

This is a fight constitutionalists crave. They are intellectually well-armed. Progressives have the media-academia-entertainment complex, but constitutionalists have the Antonin Scalia Law School’s C. Boyden Gray Center for the Study of the Administrative State. Goliath, meet David.

Adam J. White, co-director of the center, bludgeons the CFPB with its own words. The bureau now says its forever funding, because it was authorized by Congress, counts as an appropriation. But before judicial scrutiny made such candor inconvenient, the CFPB insisted that its funds are “non-appropriated” (2012) because they come from “outside the appropriating process” (2013), an assertion repeated in 2014.

In 2016, the CFPB resisted a Government Accountability Office review by arguing that the GAO reviews only the spending of appropriations, of which the CFPB said it has none — and the GAO agreed that the CFPB spends non-appropriated funds. In 2018, 40 Democratic senators opposed funding the CFPB through Congress lest this end its “independence.” Last November, the bureau said its funds are not even “government funds.”

The CFPB apparently believes it operates in a Constitution-free zone. The court should disabuse it. Doing so, the court will necessarily disabuse Congress of the idea that it can delegate to others a power vested in it by the Constitution.

As White says, it is time the court clarified the appropriations clause’s “implications for modern governance,” meaning the administrative state. This is especially urgent regarding the CFPB’s vast discretion in punishing “unfair,” “deceptive” and “abusive” practices.

The court should put this case on its autumn calendar, giving both sides preparation time commensurate with the stakes, which implicate all three branches. This case involves the judiciary’s duty to thwart Congress’s self-diminishment by impermissibly delegating power to an executive branch that wields an administrative state increasingly immune from effective control or even monitoring by Congress.

“Percolation” is lawyer lingo for allowing a complex controversy to slowly ripen through clarifying litigation. The CFPB has, however, been an affront to the Constitution for 13 years. Enough percolation, already. The court should grant the CFPB’s request for a day in court. Then the court should declare it a perfect example of what the Constitution forbids, and of what progressives since Professor Woodrow Wilson, pioneering scholar of public administration, have desired: Congress, and politics, marginalized by administrative state “experts” insulated from political accountability.