LOS ANGELES – In response to today’s Supreme Court decision to hear a case in which the Fifth U.S. Circuit Court of Appeals’ ruling attacked the funding mechanism of the Consumer Financial Protection Bureau, California Reinvestment Coalition (CRC) CEO Paulina Gonzalez-Brito offered the following comment:
“We’ve long understood Wall Street banks, payday lenders and predatory actors are more concerned with lining their pockets than they are with improving the lives of the people and communities they do business with. This baseless lawsuit not only underscores this sad reality but also illustrates these institutions will go to great lengths to eschew accountability. We’re extremely disappointed in the Fifth Circuit’s legally and practically problematic ruling. Now, more than ever before, Californians, particularly working-class and Black, Indigenous and other People of Color consumers, are at risk of unfair practices. What’s needed is a strong and independent CFPB.”
“Since its establishment, the CFPB has been vital in helping families navigate the complexities of the financial industry and the products available to them. Because of this, it’s of the utmost importance that we protect this agency. If we do not, families and vulnerable communities will be subject to significant harm. We are pleased that the Supreme Court has agreed to hear this case, and hope that it will make the right decision for consumers and our communities.”
In October, the U.S. 5th Circuit Court of Appeals ruled that “the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution” and vacated its payday lending rule.
CRC, its members and nonprofit organizations from across the country have aligned to support the CFPB, which has worked tirelessly to protect consumers from financial abuse since its creation. From returning money to consumers, fighting discrimination in lending, helping regular people find the best bank for their needs, providing tools to get the best loans, ensuring that prepaid cards are cheaper, cracking down on junk and overdraft fees, expanding access for rural communities and protecting seniors from scams and costly mistakes, the agency’s work has been efficient and critical for consumers.
Under the Dodd-Frank Act, the CFPB draws its funding from the Federal Reserve. The Fifth Circuit Court wrongly concluded that this structure violates the Appropriations Clause of the U.S. Constitution.