A Fifth Circuit ruling that the Consumer Financial Protection Bureau’s funding stream is unconstitutional has left companies under its oversight in limbo about whether its actions still have teeth.
The US Court of Appeals for the Fifth Circuit’s Wednesday decision—which said the CFPB’s funding mechanism runs afoul of the US Constitution—is seen as a case that’ll likely end up in the US Supreme Court. But an eventual high court ruling could take more than a year. If the Supreme Court agrees with the Fifth Circuit, it will spark a political fight in Congress over how to fund the agency directly.
The uncertainty will likely throw the financial services sector into chaos, with companies left guessing about how to contend with the agency until its funding is resolved. A drawn-out fight over funding then could ultimately leave the agency weakened.
“The chaos is going to happen now, no matter what,” said Kathleen Engel, a professor at Suffolk University Law School.
‘Enforcement 40’ for 2020
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