Supreme Court to Here Arguments in CFPB Funding Case
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The Supreme Court of the United States agreed on January 16, 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 case directly questions whether the CFPB’s self-reliant funding mechanism violates the Appropriations Clause of the U.S. Constitution.
Details of the Challenge
The lawsuit, originally filed by the Community Financial Services Association of America (CFSA), argues that the CFPB’s funding, derived from the Federal Reserve System rather than congressional appropriations, gives the bureau undue independence and shields it from accountability to Congress. The CFPB was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Traditionally,federal agencies receive funding through annual appropriations bills passed by Congress.The CFPB’s funding model, however, allows it to request funds directly from the Federal Reserve, capped at a certain percentage of the Fed’s operating expenses.
legal Arguments and Lower Court Rulings
The CFSA contends this funding structure violates article I, Section 9, clause 7 of the Constitution, known as the Appropriations Clause, which states that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled in October 2025 that the CFPB’s funding scheme was indeed unconstitutional, stating it “circumvented Congress’s power of the purse.” The CFPB appealed this ruling to the Supreme Court.
Potential Implications
If the Supreme Court upholds the Fifth Circuit’s decision, it coudl significantly curtail the CFPB’s authority and require it to seek annual funding from Congress. This could lead to reduced funding and increased political pressure on the agency. According to a report by the Congressional Research Service dated January 15, 2026, the CFPB’s budget for fiscal year 2025 was approximately $864 million, derived entirely from the Federal Reserve. A ruling against the CFPB could also open the door to challenges against the funding structures of other independent agencies.
Next Steps
The Supreme Court has scheduled oral arguments for the week of March 16, 2026. A decision is expected by the end of June 2026. The case number is 25-823. More data is available on the Supreme Court’s website: https://www.supremecourt.gov/
