Supreme Court upholds Consumer Financial Protection Bureau in face of conservative opposition

In a landmark decision, the Supreme Court upheld the constitutionality of the Consumer Financial Protection Bureau (CFPB) on Thursday, in a 7-2 ruling that has drawn praise from consumers and Democrats alike. The case, brought by payday lenders challenging the bureau’s rule limiting their ability to withdraw funds from borrowers’ bank accounts, was seen as a major test for the agency created in the aftermath of the 2008 financial crisis.

Justice Clarence Thomas, writing for the majority, rejected the argument that the CFPB’s funding mechanism violated the Constitution, noting that it aligns with the First Congress’ appropriations practice. The decision was hailed by Democratic Senator Elizabeth Warren, who championed the creation of the bureau, and President Joe Biden, who has taken steps to strengthen its operations.

Consumer groups celebrated the ruling, with a bureau spokesman emphasizing the importance of maintaining essential consumer protection enforcement. Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, lauded the decision for upholding the consumer bureau’s funding structure, predicting positive effects on the U.S. economy.

While some business interests supported the payday lenders in the case, others in the financial sector cautioned against a broad ruling that could disrupt the markets. This decision marks another chapter in the ongoing legal battles surrounding the CFPB, following a 2020 ruling that allowed the president to replace the bureau’s director at will.

The Supreme Court’s decision affirms the CFPB’s role in safeguarding consumers from financial misconduct and signals a victory for those advocating for stronger regulatory oversight in the financial industry.