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CFPB constitutional case overview:
- Who: The 2nd Circuit has voted 3-0 that the funding arrangement for the Consumer Financial Protection Bureau does not violate the constitution, ruling against a challenge brought by debt-collection firm the Law Offices of Crystal Moroney PC.
- Why: The debt collection firm challenged the funding for the CFPB in an attempt to get out of complying with an investigative demand the agency has made against it.
- Where: The case is in the United States Circuit Court of Appeals for the 2nd Circuit.
The 2nd Circuit ruled last week in a unanimous 3-0 decision that the payment structure for the Consumer Financial Protection Bureau (CFPB) is constitutional.
The appeals court’s decision upholds the enforcement of an investigative demand that the CFPB has made against debt collection firm the Law Offices of Crystal Moroney PC, Law360 reports.
The Law Offices of Crystal Moroney must now comply with the agency’s demand to hand over documents and other data related to an investigation into the firm’s debt collection practices.
While fighting against the demand, the debt collection firm had, among other things, argued that the way the CFPB is funded is unconstitutional, Law360 reports.
The CFPB is funded by the Federal Reserve instead of annual spending bills. The 5th Circuit ruled last year that the funding arrangement violates the Constitution’s Appropriation Clause, Law360 reports.
U.S. Supreme Court set to review constitutionality of CFPB funding
The clause requires that all federal spending must be appropriated by Congress; however, the U.S. Supreme Court is set to review the 5th Circuit’s decision during its next term.
For the time being, the 2nd Circuit said it “cannot find any support for the Fifth Circuit’s conclusion in Supreme Court precedent,” nor in the text of the Constitution or “in the history of the Appropriations Clause.”
“Because the CFPB’s funding structure was authorized by Congress and bound by specific statutory provisions, we find that the CFPB’s funding structure does not offend the Appropriations Clause,” the 2nd Circuit said.
Last month, the CFPB proposed a new rule the agency said is meant to clamp down on financial institutions charging consumers excessive credit card late fees.
Do you agree with the Second Circuit’s decision? Let us know in the comments!
The CFPB constitutional case is Consumer Financial Protection Bureau v. Law Offices of Crystal Moroney PC, Case No. 20-3471, in the United States Court of Appeals for the 2nd Circuit.
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17 thoughts onCourt rules CFPB funding constitutional, upholds enforcement demand against debt collector
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Obviously, Fifth Circuit couldn’t do a good job and gave a bad ruling. CFPB’s funding is not unconstitutional. Why should it be? Because CFPB went after the law firm’s bad and most likely unlawful business practices, they sued CFPB. Supreme Court gave a good ruling and now that law firm will have to show all their documents related to debt collection. I think at the end of the review of those documents, the management of The Law Offices of Crystal Moroney may be arrested because it’s clear that they’re hiding things.
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Add me to the list I would love to know if I qualify
Please add me to the list. Also, I would like to learn more about this and to see if I qualify as well.
Add me to the list. I would like to learn more about this and to see if I qualify for this.
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