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Attorney General Miyares Asking U.S. Supreme Court to Restore Accountability for the Consumer Financial Protection Bureau
RICHMOND, Va. - Attorney General Jason Miyares joined a 27-state coalition of attorneys general in asking the U.S. Supreme Court to uphold a lower court’s ruling that found the Consumer Financial Protection Bureau’s (CFPB) unprecedented funding mechanism unconstitutional.
Under current law, the CFPB can obtain hundreds of millions of dollars each year by sending a half-page letter to the Federal Reserve. In October, the U.S. Court of Appeals for the Fifth Circuit ruled this funding mechanism for the federal agency, which was formed during the Obama Administration and given vast power over the U.S. financial industry, is unconstitutional. The Fifth Circuit said the CFPB’s bypass of Congressional appropriations violated the Constitution’s appropriation’s clause and separations of powers doctrine. According to the Constitution’s Appropriation’s Clause, “no money shall be drawn from the Treasury, but in consequence of Appropriations made by law.”
The Appropriations Clause of the U.S. Constitution explicitly delegates the power of the purse to Congress as an oversight mechanism over federal agencies. The Fifth Circuit ruled the 2010 Congress improperly gave away that power when it granted CFPB an independent, perpetual income stream. In the 13 years since Congress made that mistake, the CFPB has resisted congressional oversight, engaged in misbehavior before federal courts, and locked states and other parties out of key regulatory decisions.
“The appropriations power is crucial to our separation of powers and protecting States’ interests. By operating outside of its prescribed methods of congressional oversight, this administrative agency casts the separation of powers to the wind and avoids any real accountability,” said Attorney General Miyares. “The Court should uphold the Fifth Circuit’s ruling and allow Congress to fulfill their oversight duty.”
Currently, the agency gets its funding from the Federal Reserve. If the Supreme Court upholds the Fifth Circuit’s ruling, then the bureau would need to get an appropriation approved by Congress through normal processes. Congress would then have an opportunity to rein in some of the agency’s activities, which have increased borrowing costs for some consumers and shut other consumers out of the credit market entirely.
All 50 states have weighed in on this case, making this one of the few cases where voices of all 50 states are being expressed in the Supreme Court.
Virginia joined Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming in the brief.