Supreme Court Agrees with Clinics’ Amicus Brief on Consumer Financial Protection Bureau

The Supreme Court rejected a challenge to funding of the Consumer Financial Protection Bureau, agreeing with an amicus brief by students in two Yale Law School clinics.

In 7-2 decision issued May 16, the court ruled in favor of the Consumer Financial Protection Bureau in CFPB v. Community Financial Services Association. The decision sides with an amicus brief filed last year by students from the Housing and Community and Economic Development clinics of the Jerome N. Frank Legal Services Organization. The brief urged the court to consider what it described as grave racial justice implications that would come with dismantling the CFPB.

In its opinion, the court held that the CFPB’s funding structure, which allows the Bureau to request money directly from the Federal Reserve subject to a statutory cap rather than through annual Congressional appropriations acts, does not violate the Appropriations Clause of the Constitution. 

While the high-interest lenders who challenged the Bureau’s funding structure argued that the duration and amount of funding resulting from this appropriations process was too indefinite, the majority opinion held that “appropriations need only identify a source of public funds and authorize the expenditure of those funds for designated purposes to satisfy the Appropriations Clause.” The opinion found that CFPB’s authorizing legislation meets these requirements.

The clinics’ brief, written alongside the Lawyers’ Committee for Civil Rights Under Law, emphasized the CFPB’s centrality to creating just financial markets for communities of color and low-income people. According to the brief, the CFPB was created in the wake of the 2008 financial crisis and the legacy of reverse redlining and predatory financial practices that preceded it. The brief argued that the unique nature of the Bureau’s financing is a response to power imbalances and a fear of regulatory capture by financial institutions. Justice Ketanji Brown Jackson echoed the idea in her concurrence, in which she wrote that “Congress designed the funding scheme to protect the Bureau from the risk that powerful regulated entities might capture the annual appropriations process.” Thirteen additional civil rights organizations signed onto the brief.

This opinion allows the CFPB to continue to receive funding and preserves its status as a financial regulator. The decision marks a significant win in the fight to end discriminatory and predatory lending practices.

Yale Law School students Nathan Cummings ’23, Rubin Danberg Biggs ’23, Gabriel Gassmann ’24, Charlie Jiang ’24, Callie McQuilkin ’25, Caroline Markowitz ’23, and Mira Netsky ’23 worked on the brief. They were supervised by Visiting Clinical Lecturer in Law and Housing Clinic co-supervisor Thomas Silverstein.