The Supreme Court’s decision that the Consumer Financial Protection Bureau’s funding source is constitutional ended years of uncertainty and the agency was preparing for survival.
The agency is now ready to play the role of archenemy number one on Wall Street again.
On Friday, the bureau announced a number of new initiatives, including a nearly 40% increase to its enforcement office, the resumption of efforts to pursue over a dozen pending court cases and legal actions, and the creation of new regulations for the credit markets.
In a call with reporters on Friday, Director Rohit Chopra stated, “The CFPB is here to stay” in reference to the court’s decision. “Every engine in the CFPB will be running.”
On Thursday, the high court rejected payday lenders’ claim that the clause regarding appropriations of government funds was breached by Congress’s decision to exclude the Consumer Financial Protection Bureau (CFPB) from the yearly budget process (a 7-2 ruling).
This highly watched case has the potential to significantly limit the authority of the bureau, which has been a political flashpoint since its inception in 2011. Democratic Senator Elizabeth Warren of Massachusetts was a professor when she and her colleagues established the organization, which claims to have returned $20 billion to customers since its start.
Other government agencies, such as the Federal Reserve and other banking regulators, which do not receive funding from the appropriations process, were also potentially jeopardized by the case. Additionally, numerous other CFPB regulations would have been called into doubt had the high court validated a lower court’s decision that nullified a payday lending rule from 2017.
Opinions differed on the result among financial sector groups, many of which have long despised the bureau for its harsh enforcement. Mortgage bankers were concerned that a ruling that placed doubt on current regulations would cause market chaos, while payday lenders were seeking to nullify agency laws.
“The CFPB will be able to forge ahead with our law enforcement work” following the case’s settlement, according to Chopra. Many enforcement actions taken by the CFPB were temporarily halted while the matter was pending before the Supreme Court. We are expanding our enforcement office due to the volume of work we have.
A top CFPB official announced that the enforcement office will be expanding its workforce by 75 individuals, including attorneys, investigators, paralegals, and economists. This will bring the overall number of staff to 275.
The source also mentioned that the bureau is going after 14 cases that were either halted or were inactive due to one company citing the ongoing Supreme Court case. These cases include litigation and Civil Investigative Demand enforcement operations.
“Expect to see more work when it comes to credit reports and credit scores,” Chopra added, hinting at impending new restrictions.
Republicans continue to pledge to limit the agency’s power because they view it as an unchecked rogue regulator.
According to Senate Banking Committee top Republican Tim Scott, “Under Director Chopra, the agency routinely and brazenly acts outside of the scope of its authority — regulating through blog posts and enforcement actions.”. “I will persist in my efforts to ensure that the bureau is held responsible and resist its misuse of authority that is motivated by politics rather than sound policymaking.”
Rep. Andy Barr (R-Ky.), a candidate for chair of the House Financial Services Committee, has introduced a bill that would subject the bureau to yearly funding from Congress.
Warren has stated her expectation that the agency will be targeted again in the future.
“The Republicans came after us, the big banks came after us, and we’re still standing,” she added. “Even we know better. They’re going to return. Another assault is imminent. They’ll find a new angle from which to attack the organization. They will repeat it endlessly.