In the aftermath of the 2007 financial crisis, Massachusetts Senator, fraud, and grifter Elizabeth Warren used the opportunity to launch a coup against the US economy. Using the power of a Democrat Congress and Barack Obama in the White House and following the credo of “Never let a good crisis go to waste,” she pushed the Consumer Financial Protection Bureau (CFPB) into existence.

The charter of the CFPB is immense. It claims jurisdiction over basically every financial transaction any consumer makes, as well as the marketing strategies of financial corporations and their relationships with consumers.

The creation of this unnecessary and overweening behemoth was accompanied by a scheme to insulate it from pressure from either the White House or Congress. The CFPB was to be run by a single director. The first one was Elizabeth Warren’s “protege,” or whatever, Richard Cordray. This allowed Cordray to do whatever he wanted without fear of being removed from his position for nearly anything short of a felony conviction. Even more egregious, the CFPB was funded independently, so neither Congress nor OMB could exert any influence on its activities. The CFPB received funding from the Federal Reserve, which is itself funded by assessments on member banks. The process essentially consisted of the CFPB director telling the Fed how much money it wanted up to 12% of the Fed’s revenue. There was zero oversight possible of either the CFPB’s actions or finances that the CFPB director did not directly control.

Needless to say, that has drawn challenges. When Cordray abruptly resigned in November 2017, he appointed his deputy as his successor. President Trump confronted this head-on and sent Mick Mulvaney to take the job (President Trump Confronts Open Rebellion at the Consumer Finance Protection Board). The hubris baked into the CFPB became evident when Cordray’s handpicked “successor,” Leandra English, sued in federal court to remain agency head. She lost.

In 2020, the US Supreme Court heard a case challenging the management structure of the CFPB to resolve a circuit split between the Ninth Circuit and the DC Circuit, which had held the single-nonremovable-director structure to be just hunky-dory, and the Fifth Circuit, which held the increasingly arcane view that the Constitution matters. The Supreme Court agreed that the Constitution governed the CFPB and threw out its unique governance.

Without a doubt, the most problematic aspect of the CFPB was its independent funding structure. Not only was it immune from Congressional appropriations and OMB direction, but unlike arguably similar arrangements with the Social Security Administration and Center for Medicare and Medicaid Services, the CFPB developed its own budget and took that money from the fees paid to a different independent agency. That freedom from direction and oversight allows the CFPB to operate as a shadow government controlling all consumer financial issues in the US.

As this melodrama was taking place, the Community Financial Services Association of America, the trade association of payday lenders (for the record, I support payday lenders because no one has ever shown me how their clients get access to cash for emergencies if they go away), went to court to challenge a CFPB rule governing payday lenders. Their challenge had two parts. The first part was that the CFPB exceeded its authority, and even if it hadn’t, the rule was arbitrary, capricious, and not supported by fact. In other words, it described Tuesday at the CFPB. The second part was that the agency was unconstitutionally structured. The district court judge hearing the case bowed to authority and ruled in favor of the CFPB. The CFSA appealed to the Fifth Circuit.

While the Fifth Circuit, which you’ll recall, struck down the CFPB’s single-director governance, let the rule stand, it did something unexpected. It declared the funding mechanism for the CFPB unconstitutional; see BREAKING: 5th Circuit Just Delivered a Decision That Has Elizabeth Warren Throwing a Hissy Fit.

CFSA vs. CFPB by streiff on Scribd

With the finding that the CFPB was unconstitutionally ordered, the Fifth Circuit then struck down the CFPB rule that it had upheld.

In like manner, we conclude that the district court erred in granting summary judgment to the Bureau and in denying the Plaintiffs a summary judgment “holding unlawful, enjoining and setting aside” the challenged rule. Accordingly, we render judgment in favor of the Plaintiffs on this claim and vacate the Payday Lending Rule as the product of the Bureau’s unconstitutional funding scheme.

This decision potentially invalidates everything the CFPB has done and, I think, calls into question the fines and penalties it has levied.

Because the ruling ran in the direction of individual freedom and governmental accountability, the Biden Justice Department appealed the decision.

Monday, the Supreme Court agreed to hear the government’s appeal.

The New York Times observes that this is probably an uphill battle. Not only is the CFPB relying on idiots for legal advice:

“If the Supreme Court accepts this deeply flawed argument against C.F.P.B. funding, it would set a dangerous precedent that would be used to challenge agencies with legally indistinguishable funding, including the Federal Reserve, F.D.I.C., Medicare and Social Security,” said Nadine Chabrier, a senior policy and litigation counsel at the nonpartisan research group Center for Responsible Lending.

This argument was thoroughly demolished in the Fifth Circuit opinion that Chabrier hasn’t bothered to read. It is also facing a court that has already objected to its funding mechanism.

In 2020, the Supreme Court ruled that a different part of the law creating the consumer bureau was unconstitutional, saying that Congress could not insulate the bureau’s director from presidential oversight given the scope of the job’s authority.

“The director has the sole responsibility to administer 19 separate consumer-protection statutes that cover everything from credit cards and car payments to mortgages and student loans,” Chief Justice John G. Roberts Jr. wrote for the majority.

He mentioned the bureau’s funding in passing, noting that its budget had exceeded half a billion dollars in recent years.

“Unlike most other agencies,” the chief justice wrote, “the C.F.P.B. does not rely on the annual appropriations process for funding. Instead, the C.F.P.B. receives funding directly from the Federal Reserve, which is itself funded outside the appropriations process through bank assessments.”

Chief Justice Roberts made the same point when the case was argued. “They don’t even have to go to Congress to get their money,” he said.

As I’ve said before:

On principle, I think independent agencies are unconstitutional as they aren’t provided for in the basic text of our government. In practice, I think they are an unmitigated evil which allows unaccountable bureaucrats to regulate finance, communications, trade, advertising, product safety, land use, and all manner of things with great impunity. They are an abdication of authority by the executive and the legislative branches which mirrors that same willing abdication of authority to the judiciary. The CFPB, in particular, is a horror show because the president can’t fire the director.

The danger is that John Roberts is always ready to let a manifest injustice go ahead because fixing it would be messy. The Supreme Court’s job is law, not administration. He should rule the CFPB unconstitutional and all its acts illegal. I suspect he’ll try to find some way of rescuing the CFPB, just like he rescued Obamacare. I hope the same team that voted to end the moral and cultural horror of abortion finds the courage to end the Constitutional horror that is the CFPB. Elizabeth Warren dropping of an aneurysm while doing a war dance will just be icy on a very tasty cake.