The U.S. Supreme Court of the United States ruled in favor of the Consumer Financial Protection Bureau in a case disputing the constitutionality of the agency’s funding mechanism.

The Court ruled 7-2 in the case of Consumer Financial Protection Bureau v. Community Financial Services Association of America, a group that advocates for the payday lending industry.

The Court’s decision overturns the 2022 Fifth Circuit panel decision that the funding mechanism violates the Appropriations Clause of the U.S. Constitution.

The CFPB was created as part of the Dodd-Frank Act, enacted in 2010. The law allowed the CFPB to be funded through the Federal Reserve in perpetuity, not by Congress as part of the regular appropriations process. 

Attorney Eric Johnson, a partner with the Maryland-based Hudson Cook law firm, offered his reaction to the decision.

“If you listened to the oral arguments, this decision in favor of the CFPB wasn’t much of a surprise, although a 7-2 decision is a bit of surprise,” Johnson said. “With this cloud of uncertainty over the Bureau’s funding lifted, I believe this decision will now open the floodgates at the CFPB for new enforcement actions, new CID (civil investigative demands) issuances, cases that were put on ‘hold’ pending the outcome of this case springing back to life and other activity.”