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Most Supreme Court justices seemed inclined to uphold how CFPB is funded


The Supreme Court heard a major case involving the structure of government today. A majority of the justices seemed inclined to uphold the way the Consumer Financial Protection Bureau and many other federal agencies are funded. NPR legal affairs correspondent Nina Totenberg reports.

NINA TOTENBERG, BYLINE: After the 2008 crash, Congress created the CFPB to protect consumers from what were seen as predatory and deceptive practices by financial institutions. Since then, the bureau has established consumer protections for transactions ranging from mortgages to credit cards. But payday lenders have, for years, fought regulations that would limit excessive fees charged on small loans of just a few hundred dollars - fees that often end up costing people thousands of dollars.

Then, last year, the Fifth Circuit Court of Appeals ruled that the CFPB's structure is unconstitutional because, instead of an annual congressional appropriation, Congress set the agency's funding at a capped amount that comes from banking fees paid to the Federal Reserve System. The government appealed to the Supreme Court because many other agencies are similarly funded, including the Federal Reserve itself; the FDIC, which insures bank deposits; the Office of the Comptroller of the Currency, which charters and regulates all national banks; and potentially even Social Security and Medicare, which are funded by a specific tax.

At the high court today, Solicitor General Elizabeth Prelogar defended the CFPB's funding mechanism, noting that the Constitution's framers created similar funding structures.


ELIZABETH PRELOGAR: The very first Congress appropriated without specifying a fixed sum. The first act that it enacted that was an appropriation specified up to a particular cap of spending that was authorized. That's just how the CFPB's funding mechanism is structured today, and there have been countless appropriations that look like this throughout history. We counted more than 400 uses of this kind of discretion.

TOTENBERG: But Chief Justice Roberts sounded skeptical.


JOHN ROBERTS: You have a very aggressive view of Congress' authority under the appropriations clause.

TOTENBERG: Justice Gorsuch asked whether the current rules would apply if the CFPB funds were not capped at $600 million, but a trillion dollars, but Justice Kavanaugh interjected.


BRETT KAVANAUGH: So Congress could change it tomorrow.

PRELOGAR: Absolutely, Congress could change it tomorrow.

TOTENBERG: Representing the payday lenders on the other side of the argument was former Solicitor General Noel Francisco.


NOEL FRANCISCO: Congress has never authorized an agency to pick its own perpetual appropriation. And if it can do that for the CFPB, then you have blessed a regime in which Congress can authorize the executive branch to spend whatever it wants to fund the entire government.

TOTENBERG: But several of the justices, both conservative and liberal, flatly told Francisco that his argument made no sense to them because it had no limiting principle - Justice Barrett.


AMY CONEY BARRETT: Mr. Francisco...

FRANCISCO: Well, this is effectively...

CONEY BARRETT: ...What would the standard be? Is it, like, an intelligible principle of money spent? I mean, I think we're all struggling to figure out, then - what's the standard that you would use? Just assuming that you're right - that there has to be something more than the $600 million - how do you decide how much is too much?

FRANCISCO: It's difficult to come up with a hard-and-fast rule that's saying too much is too much, which is why...

TOTENBERG: Justice Kavanaugh questioned Francisco's argument that the CFPB is funded by a perpetual appropriation.


KAVANAUGH: The word perpetual I'm having trouble with because it implies that it's entrenched and that a future Congress couldn't change it. But Congress could change it tomorrow. There's nothing perpetual or permanent about this.

TOTENBERG: Francisco seemed to suggest that the problem with the CFPB funding is that it didn't go through an annual line-item congressional appropriation. But Justice Kagan pointed out that standing appropriations like this one were common at the founding.


ELENA KAGAN: Annual line-item appropriations were some appropriations but, massively, not all appropriations.


KAGAN: And so you're just flying in the face of 250 years of history.

TOTENBERG: Justice Thomas also seemed frustrated.


CLARENCE THOMAS: I'd like you to complete this sentence - funding of the CFPB is - violates the appropriations clause because...

FRANCISCO: Because Congress has not determined the amount that this agency should be spending. Instead, it has delegated to the director the authority to pick his own appropriation, subject only to an upper limit that's so high it's rarely meaningful.

TOTENBERG: A decision in the case is expected next year.

Nina Totenberg, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Nina Totenberg is NPR's award-winning legal affairs correspondent. Her reports air regularly on NPR's critically acclaimed newsmagazines All Things Considered, Morning Edition, and Weekend Edition.
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