Appellate Court Rules that the CFPB’s Funding Structure Is UnconstitutionalPrepared for the NPA Board and GRC Meetings on October 25 and 26, 2022

By Your GRC Consultants


On Wednesday, October 19, 2022, a three-judge panel of the United States Court of Appeals ruled that the CFPB’s funding structure is unconstitutional in violation of the appropriations powers of Congress. The CFPB gets its funding from the Federal Reserve, which itself operates outside Congress’ appropriations powers.


The ruling is a major blow to the CFPB’s future and a giant win for the plaintiffs, the Community Financial Services Association of America Ltd. (“CFSA”). Why? The ruling also vacated the 2017 Small-Dollar Lending Rule, which has not taken effect because of the CFSA challenge. This means that the Rule cannot be enforced– unless another ruling from the Fifth Circuit or the Supreme Court reverses the Fifth Circuit’s ruling. For now, the Rule will not go into effect.


What does this ruling mean for pawnbrokers?