The Consumer Financial Protection Bureau survives
Justice Alito would like the US to be an unregulated autocratic playground for the rich, ruled by an unaccountable Republican President. Justice Gorsuch, even though he has been more discrete (he does not fly upside-down flags) in expressing his political philosophy, is a Federalist Society baby. So, it was no surprise they voted against the consumer in a case involving the Consumer Financial Protection Bureau (CFPB). An agency dedicated to protecting financial consumers’ rights
However, the Supreme Court’s other four conservatives shunned them. On Thursday, they sided with the three liberals in the CFPB v. Community Financial Services Association of America case. In a rare victory for the American consumer, SCOTUS put people above profits by a 7-2 margin.
The issue was the constitutionality of the CFPB’s funding. SCOTUS had to decide whether to uphold the Fifth Circuit’s opinion that the funding mechanism was unconstitutional. If they had agreed with America’s most far-right Circuit Court, the CFPB would be out of business until Congress passed a law with an acceptable funding source. And that would never happen as long as the GOP controls the vote in at least one-half of Congress.
SCOTUS described the funding issue in its decision thus:
The Constitution gives Congress control over the public fisc [legalese for finances] subject to the command that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”
For most federal agencies, Congress provides funding through annual appropriations. For the Consumer Financial Protection Bureau, however, Congress provided a standing source of funding outside the ordinary annual appropriations process. Specifically, Congress authorized the Bureau to draw from the Federal Reserve System an amount that its Director deems “reasonably necessary to carry out” the Bureau’s duties, subject only to an inflation-adjusted cap.
In this case, several trade associations representing payday lenders and credit-access businesses challenged regulations issued by the Bureau pertaining to high-interest consumer loans on statutory and constitutional grounds. As relevant here, the Fifth Circuit accepted the associations’ argument that the Bureau’s funding mechanism violates the Appropriations Clause.
(Bolding mine)
When the Democratic Congress created the CFPB, they knew the GOP would defund it when they regained power. The GOP can be relied on to back business — no matter who gets hurt. To protect the Bureau, Democrats funded it from a source beyond Congress’s control — the Federal Reserve.
Loan sharks lose one
Look who that pissed off — “payday lenders and credit-access businesses.” These are the reptilian loan sharks who bleed poor and credit-challenged borrowers with exorbitant interest rates (up to 662%) secured by forced access to bank accounts.
Those soulless opportunists did not sit on their hands. They sued. And initially they won. However, unfortunately for these financial pirates, SCOTUS disagreed with the Fifth Circuit. Its decision was thus:
Held: Congress’ statutory authorization allowing the Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfies the Appropriations Clause
Clarence Thomas wrote the decision. Really? Roberts likely gave the assignment to Thomas to give the gluttonous Justice an everyman fig leaf to cover his naked grifting. (Good luck with that.) Whatever, let us encourage this behavior.
The opposition
In his opposing opinion, Alito found something in the Constitution, tradition, and case law that no other Justice, except his fellow traveler Gorsuch, had spotted. Sammy A was his usual hyperbolic self. In a supreme example of the straw man fallacy, he larded his dissent with a hysterical fantasy unrelated to anything the majority had said. In his words:
In short, there is apparently nothing wrong with a law that empowers the Executive to draw as much money as it wants from any identified source for any permissible purpose until the end of time.
Untrammeled executive power is not usually a concern for Alito. The MAGA apologist is normally a fan of an imperial presidency. He is one of the reasons that SCOTUS is considering presidential immunity. In that case, Alito seems poised to argue that the President has criminal immunity in office. If so, Alito could enable the Executive to rob banks for any permissible purpose until the end of his term — which would arrive whenever the Executive decided.
(Over the top? Sorry. I was channeling my inner Alito.)
History
In 2007, Sen. Elizabeth Warren — then a Harvard Law professor — proposed the CFPB. At the time, the US was on the verge of a greed-created, financial catastrophe. Banks had bundled undocumented liar loans and other sketchy financial products into derivatives and sold them as tradable instruments. As long as everyone was making money, no one cared about the risk.
When the financial boat foundered, banks relied on the taxpayer to keep them afloat — even as their executives kept cashing bonus checks. Warren et al. knew it would happen again as banks had little incentive to be prudent.
In 2010, Congress passed Dodd-Frank. This act introduced sensible measures — including the CFPB — to lessen the odds of another catastrophic financial collapse. And to protect the retail financial consumer. However, bankers had become addicted to risk-free profit, damn the consequences. The pigs squealed. Not that it was that bad for them.
Even after Dodd-Frank, bankers knew they had few worries. They would pay billion-dollar settlements, knowing those penalties paled compared to their ballooning profits. And most telling, almost no executive was charged with a felony and threatened with prison.
But that was no help to the strip mall bandits. They also wanted to keep bleeding their customers. On Thursday, Alito and Gorsuch had their back. But for once, the rest of the SCOTUS conservatives sided with the little guy.
The future
The cynic in me wonders if this is only to give themselves cover when they sign off on a national abortion ban. Further strip poor and minority voters of their electoral rights. And decide that Trump is free to be a fascist.
#vote.