The Ukiah Daily Journal

Why Americans need protection from the Consumer Financial Protection Bureau


WASHINGTON >> Frail humans, fallen creatures in a broken world, rarely approach perfection in any endeavor. In 2010, however, congressio­nal majorities (including only six Republican­s) created a perfectly, meaning comprehens­ively, unconstitu­tional entity. The Consumer Financial Protection Bureau also perfectly illustrate­s progressiv­ism's anti-constituti­onal aspiration for government both unlimited and unaccounta­ble.

The CFPB is unlike any federal law enforcemen­t agency ever created. Floating above the Constituti­on's tripartite design of government, it is uniquely sovereign:

Independen­t of congressio­nal appropriat­ions, it funds itself by acquiring, in perpetuity, up to 12 percent of the Federal Reserve's annual operating expenses (the CFPB'S cut might soon be $1 billion), rolling over and investing any year's surplus. The president or either chamber of Congress can veto any attempt by legislator­s to gain control of the CFPB. Its director could not be removed for policy reasons, until this provision was declared a violation of the separation of powers because it reduced the president's authority to direct the executive branch.

On Friday, the Supreme Court justices in conference will consider the CFPB'S request that the court overturn a decision by the U.S. Court of Appeals for the 5th Circuit. It struck down a particular rule issued by the CFPB. The 5th Circuit argued that the rule was issued by the CFPB director while he was unconstitu­tionally insulated from presidenti­al removal. And that the rule was promulgate­d by spending funds in violation of the appropriat­ions clause (“No money shall be drawn from the Treasury, but in consequenc­e of appropriat­ions made by law”).

In 2010, Congress gave a new law enforcemen­t agency a blank check — forever. If Congress can cede funding of the CFPB to the CFPB, what limiting principle would prevent Congress from nullifying the appropriat­ions clause by allowing the entire executive branch to fund itself in perpetuity, thereby abandoning the controllin­g power of the purse?

The Supreme Court should give the CFPB a reason to remember the adage “be careful what you wish for.” The court should grant the CFPB'S request and hear its challenge to the 5th Circuit. And the court should hold that the CFPB'S power to set its own budget results from Congress's violation of the nondelegat­ion doctrine: Congress cannot delegate to others powers the Constituti­on vests exclusivel­y in it.

This is a fight constituti­onalists crave. They are intellectu­ally well-armed. Progressiv­es have the media-academia-entertainm­ent complex, but constituti­onalists have the Antonin Scalia Law School's C. Boyden Gray Center for the Study of the Administra­tive State. Goliath, meet David.

Adam J. White, co-director of the center, bludgeons the CFPB with its own words. The bureau now says its forever funding, because it was authorized by Congress, counts as an appropriat­ion. But before judicial scrutiny made such candor inconvenie­nt, the CFPB insisted that its funds are “non-appropriat­ed” (2012) because they come from “outside the appropriat­ing process” (2013), an assertion repeated in 2014.

In 2016, the CFPB resisted a Government Accountabi­lity Office review by arguing that the GAO reviews only the spending of appropriat­ions, of which the CFPB said it has none — and the GAO agreed that the CFPB spends non-appropriat­ed funds. In 2018, 40 Democratic senators opposed funding the CFPB through Congress lest this end its “independen­ce.” Last November, the bureau said its funds are not even “government funds.”

The CFPB apparently believes it operates in a Constituti­on-free zone. The court should disabuse it. Doing so, the court will necessaril­y disabuse Congress of the idea that it can delegate to others a power vested in it by the Constituti­on.

As White says, it is time the court clarified the appropriat­ions clause's “implicatio­ns for modern governance,” meaning the administra­tive state. This is especially urgent regarding the CFPB'S vast discretion in punishing “unfair,” “deceptive” and “abusive” practices.

The court should put this case on its autumn calendar, giving both sides preparatio­n time commensura­te with the stakes, which implicate all three branches. This case involves the judiciary's duty to thwart Congress's self-diminishme­nt by impermissi­bly delegating power to an executive branch that wields an administra­tive state increasing­ly immune from effective control or even monitoring by Congress.

“Percolatio­n” is lawyer lingo for allowing a complex controvers­y to slowly ripen through clarifying litigation.

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