Washington, D.C. — As the Supreme Court gears up to hear arguments this fall in Consumer Financial Protection Bureau v. Community Financial Services of America, a case challenging the constitutionality of the CFPB’s funding structure, the American Economic Liberties Project and Democracy Forward today released a joint brief, “The War on the Consumer Financial Protection Bureau,” laying out the true stakes of the case.

“This case isn’t about just one agency — this is an attack on the very idea of government working for the people,” said Shahid Naeem, Senior Policy Analyst at the American Economic Liberties Project. “Payday lenders and other predatory financial players have brought a legally baseless suit to hinder the CFPB’s ability to ensure financial services markets are fair, transparent, and competitive. If upheld, the Fifth Circuit’s rogue ruling would risk not just the CFPB, but threaten the nation’s economic stability and key government services like Medicare and social security.”

“There is nothing new or unprecedented about the way the Consumer Financial Protection Bureau (CFPB) is funded. The 5th Circuit’s opinion to the contrary is not tethered to the Constitution and does not reflect the history of how Congress has created and funded executive branch agencies since the beginning of our nation,” said Joe Gaeta, Director of Oversight and Engagement at Democracy Forward and co-author of the report. “Far-right, anti-consumer interests have been trying to kill the CFPB since it was founded even if it means saddling Americans with uncertainty across sectors.”

Congress established the CFPB in the wake of the 2008 financial crisis, tasking it with protecting Americans from abuse in the consumer financial industry. In 2022, the Fifth Circuit Court of Appeals struck down a CFPB rule protecting borrowers from abusive payday lenders, citing its unconstitutional funding structure, a structure it shares with the Federal Reserve and numerous other federal agencies. The ruling, already refuted by the Second Circuit, if not overturned by the Supreme Court would sow chaos in financial markets and void countless actions taken by the CFPB to fight wrongdoing by powerful corporate giants like big banks, credit card firms, and credit reporting companies, which have so far resulted in nearly $17.5 billion returned to Americans.

As the brief explains, beyond just the CFPB, a possible adverse decision carries grave implications for critical financial regulators, and for the economy as a whole. Adoption of this new Appropriations Clause theory to the funding of federal agencies and programs could undermine any agency or program not funded in annual appropriations bills. Litigation against other agencies like the Federal Reserve, OCC, FDIC, and other financial regulatory bodies could threaten core pillars of our economic and financial regulatory system, especially after a series of bank collapses created turmoil this year in financial markets.

Also endangered would be critical, longstanding programs like Medicare, Social Security, unemployment benefits, child nutrition assistance, and others relied on by hundreds of millions of working Americans across the country. All told, if the Supreme Court were to uphold the Fifth Circuit’s ruling, it could make nearly two-thirds of federal spending illegal, inviting further legal challenges with the potential to gut the American state as we know it.

Read The War on the Consumer Financial Protection Bureau: Community Financial Services of America v. CFPB here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.