CFPB Funding Mechanism Violates Constitution, Fifth Circuit Says (1)

The Consumer Financial Protection Bureau’s independent funding through the Federal Reserve violates the Constitution’s separation of powers clause, the Fifth Circuit ruled.

The constitutional flaws found by the U.S. Court of Appeals for the Fifth Circuit in its Wednesday ruling also invalidated the remaining portions of the CFPB’s restrictions on the lenders offering payday, auto title and other short-term, high-interest loans.

“The Bureau’s perpetual self-directed, double-insulated funding structure goes a significant step further than that enjoyed by the other agencies on offer,” Judge Cory T. Wilson wrote for the appeals court’s three-judge panel.

The ruling was a win for payday ...