Supreme Court to Hear Arguments on CFPB Funding model in June
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The Supreme Court agreed on January 15, 2026, to hear arguments in Consumer Financial Protection Bureau v. Community Financial Services Association of America,Ltd., a case challenging the constitutionality of the CFPB’s funding structure. The court will consider whether the CFPB’s independent funding mechanism, which draws directly from the Federal Reserve System rather than annual congressional appropriations, violates the Appropriations Clause of the U.S. Constitution.
Background on the CFPB Funding
the CFPB, established by the Dodd-Frank Wall Street Reform and Consumer protection Act in 2010, is funded by a percentage of the Federal Reserve System’s earnings, not through the typical congressional appropriations process.This structure was intended to provide the agency with independence from political pressure. According to the CFPB’s 2025 annual report, the agency received $793.4 million in funding from the Federal Reserve in fiscal year 2025. The Community Financial services Association of america (CFSA), a payday lending trade group, argues this funding model gives the CFPB unchecked power and circumvents Congress’s control over federal spending.
The Legal Challenge
The CFSA initially challenged the CFPB’s 2017 rule regulating payday loans in the U.S. District Court for the Western District of Texas. The district court ruled in favor of the CFSA,finding the CFPB’s funding unconstitutional. On appeal, the Fifth Circuit Court of Appeals affirmed this ruling on October 17, 2025, stating the CFPB’s funding scheme “skirted the normal appropriations process” and was therefore unconstitutional. The CFPB appealed to the Supreme Court, seeking to overturn the Fifth Circuit’s decision.
potential Implications
A Supreme Court ruling against the CFPB’s funding model could have significant consequences. If the court finds the funding unconstitutional, it could invalidate past CFPB actions and require the agency to seek annual appropriations from Congress.This could substantially weaken the CFPB’s ability to regulate financial institutions and protect consumers. Conversely, a ruling upholding the funding structure would affirm the CFPB’s independence and allow it to continue operating as intended. Oral arguments are scheduled for June 2026, with a decision expected by the end of the Court’s term in late June or early July.
source: Consumer Financial Protection Bureau Annual Reports, Supreme Court of the United States
