Type: Law Bulletins
Date: 12/02/2022

CFPB is in Existential Crisis – and Covered Parties Have a Unique Opportunity

Due to a Fifth Circuit decision striking down the Consumer Financial Protection Bureau’s (CFPB) Payday Lending Rule promulgated in 2017 — in a case known as Community Financial Services Association of America, Limited v. CFPB — the Bureau’s very existence is in peril.

Some of the key takeaways from this decision are:

  • CFPB’s funding structure violates the Constitution’s Appropriations Clause.
  • There was a “linear nexus” between the unconstitutional funding mechanism and the challenged CFPB action — in this case, a rule promulgated by the Bureau.
  • That nexus applies to all CFPB actions resultant from the CFPB’s funding, including the rules it promulgates, the investigations it conducts, and the decisions it makes.
  • Most and perhaps all of the CFPB’s actions, rules, investigations, and decisions are in jeopardy.
  • Private entities subject to the CFPB might want to deploy this decision expeditiously and strategically.

In this Taft white paper, partner Sohan Dasgupta details how the CFPB operates and provides further insight into the Fifth Circuit decision, including who benefits most from it.

Download the white paper here.

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