Consumer Advocates Warn Supreme Court Ruling Could Lead to "Economic Chaos"

Consumer advocates outline risks in Supreme Court case

A consumer advocacy group is warning that if the Supreme Court rules against the current funding structure of the Consumer Financial Protection Bureau (CFPB), economic chaos could result.

The U.S. Supreme Court will hear arguments this week in the case of Consumer Financial Bureau vs. Consumer Financial Services Association. The CFSA represents the payday lending industry. The case, brought by backers of payday lending, could undermine the current funding structure of the CFPB, a key consumer finance regulator.

Representatives of the Center for Responsible Lending (CRL) say that if the CFPB's funding structure is overturned, it could create uncertainty in the consumer finance marketplace. Additionally, CRL says a decision against CFPB funding could have implications for other federal regulatory agencies.

“Congress established funding streams outside of its annual appropriations process for the Federal Reserve Board, FDIC, Medicare, Social Security, and other crucial government agencies. The Fifth Circuit’s promise that its ruling only affects the CFPB and will not invalidate similarly funded agencies is as reassuring as an arsonist claiming your office won’t be affected when he incinerates the adjoining building,” said Mike Calhoun, president at the Center for Responsible Lending (CRL). “Even during government shutdowns, these agencies – along with the Supreme Court itself – are open and operational because of this independent funding. Even if lawsuits don’t eliminate these agencies, they could exacerbate government shutdowns by making essential financial oversight, support for seniors, and more subject to the political whims of Congress – something Congress itself recognized as foolish.”

The group suggests that a ruling against CFPB's current funding structure would be problematic, saying it "would eliminate essential guidance for mortgage lenders and other financial firms and cause economic chaos."

The CRL points out that a number of agencies have funding structures similar to the CFPB, including:

Citizenship and Immigration Services; Farm Credit Administration; Federal Deposit Insurance Corporation (FDIC); Federal Housing Finance Agency; Federal Reserve Board; Medicare; National Credit Union Administration; Office of the Comptroller of the Currency (OCC); Social Security; United States Mint; United States Patent and Trademark Office; and the United States Postal Service.

Photo byIan HutchinsononUnsplash