Consumer Reports warns that the consequences could be devastating for consumers and economy if Court rules against CFPB
WASHINGTON, D.C. – The Supreme Court will hear arguments today in Consumer Financial Protection Bureau (CFPB) vs. Community Financial Services Association of America (CFSA), a case brought by the payday loan industry challenging the CFPB’s funding provided through the Federal Reserve Board. A ruling against the CFPB would have very serious consequences for consumers and the economy, according to Consumer Reports.
“The stakes couldn’t be higher for consumers and the future of the CFPB,” said Delicia Hand, director of financial fairness for Consumer Reports. “If the Supreme Court sides with the payday lenders in this case, it would severely undermine a vital cop on the beat that holds banks and other financial firms accountable when they engage in predatory practices that cheat consumers out of their money.”
Hand continued, “With consumer prices on the rise and financial companies introducing powerful and sometimes risky technologies into everyday consumer transactions, a ruling against the CFPB would cripple this vital watchdog at the worst possible moment.” Earlier this year, CR joined with other consumer groups in an amicus brief to urge the Supreme Court to uphold the constitutionality of the CFPB’s independent funding structure.
If the Justices don’t reverse a lower court’s 2022 decision in the case, CFPB rules that protect consumers from junk fees, risky mortgages, discriminatory practices, predatory lenders, abusive debt collectors, and more, could be called into question and possibly nullified. The agency’s ability to enforce consumer protection laws and supervise financial institutions – even those predating its existence – could evaporate.
Perhaps most concerning, the system that enables Americans to obtain mortgages – and thus buy and sell homes – could, in the words of the industry’s own lawyers, “grind to a halt,” delivering a gut blow to the broader economy.
For more information, see Here’s What Could Happen if the Supreme Court Declares the CFPB Unconstitutional
Since its founding in 2010, the CFPB has established itself as a critical watchdog for consumers and obtained over $16 billion in relief for 192 million Americans who were mistreated by shady lenders and other financial firms. Congress created the CFPB with independent funding through the Federal Reserve in order to shield it from the political pressure wielded by the powerful financial industry. In addition to the CFPB, the Federal Reserve, the office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation all receive their funding independent from the annual congressional appropriations process.