I posted this earlier, but am reposting with a catchier title. The TLDR: The Consumer Financial Protection Bureau (CFPB) receives it's funding from the Federal Reserve, not congress. The Supreme Court deemed that it's legal to fund this way.
From: https://api.neonemails.com/emails/content/W2SgVUeIucJezpq0cZ7wn80_cWsqI92Yz15ncUA4ddI=
This morning, the Supreme Court preserved the Consumer Financial Protection Bureau (CFPB) by upholding the agency’s funding mechanism as constitutional in a 7-2 vote.
The justices’ decision caps a battle that marked the biggest legal threat to the CFPB since it was established in the wake of the 2008 financial crisis to crack down on predatory lending and enforce consumer protection laws.
Two lender trade associations, backed by business groups and all the nation’s Republican state attorneys general, contended the agency’s funding from the Federal Reserve violates Congress’s power of the purse. Writing for the majority, Justice Clarence Thomas rejected that argument and sided with the Biden administration. Conservative justices Samuel Alito and Neil Gorsuch dissented, writing that since the “earliest days” of the nation, Congress’s power of the purse has been its most “complete and effectual weapon.”
Established as part of the Dodd-Frank Wall Street reform law, lawmakers looked to insulate the CFPB by creating a funding mechanism outside Congress’s annual appropriations process. Republicans have long targeted the independent agency, lamenting that lawmakers have little control over it. Former House Speaker John Boehner (R-Ohio) and 132 Republican members of Congress filed briefs backing the challengers.
The high court acknowledged that the CFPB is “different” than other agencies but determined its method of drawing funds from the Federal Reserve System that its director has deemed “reasonably necessary to carry out” is constitutional.
Your headline is wrong. No they didn't bypass Congress nor is a precedent set up to bypass Congress.
Congress itself established it that way (and therefore they weren't bypassed), and the Supremes simply agreed that it was okay despite the unusual structure that Congress had established.
I'm no fan of the CFPB, but that's beside the point.
Thank you for the correction. I meant that congress didn't have to approve how funds were used by CFPB since they were funded by another source.
Edit to add: the Federal Reserve is a private organization and not a government organization. I believe that means that congress has outsourced its government oversight.
Edit 2: I am not explaining myself well today. I guess my mental connection when I made the title was that since the Federal Reserve operates opaquely, is not subject to congressional oversight and is not allowed to be audited by law, that means that the CFPB is likely also being operated opaquely and not subject to congressional oversight, too.
No sweat.
It's a screwy arrangement for the CFPB regardless, and it deserves to be highlighted. It's a little like saying "we establish agency X and it will be funded by the bounty of the forest," meaning they've delegated the funding to a random variable. Except the Fed has infinite money, so not so random.
I think Congress routinely gives agencies separate funding mechanisms, like allowing the FDA to raise money from drug approval fees (*cough, cough ... drug approval application expenses.) On the other hand the Post Office has to beg Congress every time they raise the price of a stamp, or at least they used to.
Theoretically Congress set the boundaries of the CFPB's powers when it was established. In reality they gave them an open field with lots of latitude. Thinking about it, their purview is so large I wouldn't even be surprised if this agency started messing around with Gamestop.
"their purview is so large I wouldn't even be surprised if this agency started messing around with Gamestop."
ha ha! :)
How does this play in light of the ruling on the Chevron Doctrine?
Don't know. Congress specifically gave them an incredibly wide scope of operations, so there's lots of reasons not to like the CFPB in terms of government overreach, but I don't think that part was challenged in this case; just the funding mechanism which is rather unique.
Hmmm, questionable ruling, BUT it may just be a reflection of how the SCOTUS (like most Americans) feel about the Congress. But still, this is an oddity of a decision and one that may have lasting consequences in the future.
It certainly has me wondering how many more new government agencies will pop up that are funded by the Federal Reserve, which is a private organization and not a government organization. Congress has outsourced government.
The fact that justice Thomas sided with the majority peaked my interest. I have to read the decision and the dissenting views to make chocolate from it.