The Fifth Circuit Court of Appeals heard appeals in Consumer Financial Protection Bureau v. All American Check Cashing from the trade groups challenging a 2017 CFPB rule on payday and high-rate installment loans. The trade groups are arguing the CFPB did not have the authority to enact the rule because at the time the bureau was operating what would later be determined to be an unconstitutional leadership structure.
The 2019 Supreme Court case Seila Law v. CFPB determined that the “for cause” removal restriction of the CFPB director was unconstitutionally restrictive on the president’s authority to remove appointed government officers.
The trade group appellants, like many other groups that have been subject to CFPB action prior to the Seila Law decision, are now asserting that the initial rulemaking, and subsequent enforcement actions were also unconstitutional because they were performed by a government agency that was operating under an unconstitutional leadership structure.
As with every other court that has heard this argument, the Fifth Circuit did not agree with the assertion and decided that the rule and its enforcement could proceed. The courts have nearly unanimously decided that in cases were there is an unconstitutionally restrictive removal, the actions of the director and agency are not necessarily unconstitutional because the appointment of that director still passed constitutional muster.
The All American appellants made another constitutional argument against the CFPB’s authority due to a perceived violation of the Appropriations Clause. The CFPB’s currently funding is done through the Federal Reserve, not appropriations from Congress as is the norm.
In a concurring opinion, four of the Fifth Circuit judges agreed that the constitutional question of the CFPB’s appropriations structure had merit and therefore the enforcement action should be dismissed. The trade groups felt that this should also be enough to rescind the 2017 rule.