Fannie Mae (FNMA)

[Robert from yahoo bd]

QUESTION PRESENTED (I added bold)
Whether the court of appeals erred in holding that the
statute that describes how the Consumer Financial
Protection Bureau is funded, 12 U.S.C. § 5497, violates the
Appropriations Clause, U.S. Const. Art. I, § 9, Cl. 7, and
in vacating a regulation promulgated at a time when the
CFPB was receiving such funding.

INTRODUCTION AND INTERESTS
OF AMICI CURIAE*
The Consumer Financial Protection Bureau is a failed
experiment in administrative governance. Conceived as
an answer to the problems that led to the Great Recession,
Congress endowed the Bureau with an “unprecedented
combination of structural characteristics” meant to
cloister it from outside accountability. William Simpson,
Above Reproach: How the Consumer Financial
Protection Bureau Escapes Constitutional Checks &
Balances, 36 REV. BANKING & FIN. L. 343, 345 (2016). At
the same time, Congress gave the agency “enormous
power over American business, American consumers, and
the overall U.S. economy.” PHH Corp. v. CFPB, 881 F.3d
75, 165 (D.C. Cir. 2018) (Kavanaugh, J., dissenting). This
toxic blend of broad power and unchecked autonomy has
been a problem from the start.

...This “financial
freedom,” the Court observed, “makes it even more likely that the agency will slip … from [the control] of the
people.” Id. at 2204 (cleaned up).

The appropriations issue that Seila Law noted has now
come to a head. In the decision below, the Fifth Circuit
correctly held that the CFPB’s unprecedented funding
scheme impermissibly shifts Congress’s power of the
purse to the Bureau.

The CFPB experiment has failed. The Court should
return it to the lab.

The
Appropriations Clause serves an important purpose: it
allows Congress to supervise and control federal
administrative agencies.

III. The decision below is correct. The Fifth Circuit
took Congress at its word—Congress said it was not
making an appropriation, and nothing else in the law
overcomes that express statement. The Court should not
accept the Bureau’s invitation to rewrite or ignore
Congress’s direction. And neither history nor practice can
save the Bureau, either, especially when the historical
record contains many instances of the Bureau describing
itself as an agency without an appropriation. Having
correctly found that the CFPB violated the
Appropriations Clause, the Fifth Circuit was right to
vacate the rule at issue.

A. Article 1, Section 9, Clause 7 of the Constitution
says that “[n]o Money shall be drawn from the Treasury,
but in Consequence of Appropriations made by Law.”
This “straightforward and explicit command” means what
it says: “[N]o money can be paid out of the Treasury
unless it has been appropriated by an act of Congress.”
OPM v. Richmond, 496 U.S. 414, 424 (1990). The
Founders regarded congressional power over the purse
“as the most complete and effectual weapon with which
any constitution can arm the immediate representatives of
the people.” THE FEDERALIST NO. 58 (James Madison).
So the Appropriations Clause’s restraint is “absolute.”
U.S. Dep’t of Navy v. FLRA, 665 F.3d 1339, 1348 (D.C.
Cir. 2012) (Kavanaugh, J.). It covers “any sum of money
collected for the government.” Ring v. Maxwell, 58 U.S.
147, 148 (1854); accord Republic Nat’l Bank of Mia. v.
United States, 506 U.S. 80, 93 (1992).

The Appropriations Clause is an important way that
the Constitution entrusts the “difficult judgments” to
Congress. Richmond, 496 U.S. at 428. Congress is
thought to be motivated by the “common good,” rather
than the “individual favor” that “Government agents”
might use to decide an issue. Id. Appropriations power
also provides Congress “a controlling influence over the
executive power.” 2 JOSEPH STORY, COMMENTARIES ON
THE CONSTITUTION OF THE UNITED STATES § 530, at 14
(1833). Even with “independent” agencies like the SEC,
“[s]ubjecting any regulatory agency to the congressional
appropriations process places constraint on that agency.”
Conrad Z. Zhong, A New Way to Fund the Consumer
Financial Protection Bureau, 18 U.C. DAVIS BUS. L.J. 1,
18 (2017).

...congressional control over an agency’s
finances is “[t]he most constant and effective control”).
The “appropriations monopoly” lets Congress control
“agencies by altering total funding, targeting specific
programs through earmarks and riders, and using signals
and threats.”

But an agency free
from the appropriations process can keep critical
information out of public view for as long as possible. As
a result, broader enforcement initiatives may become
hard to spot until the pattern emerges. Even rulemakings
may lack the transparency that the appropriations
process offers, as “many substantive policy decisions
happen before the agency publishes the notice of proposed
rulemaking.”

Thus, the CFPB is its own appropriator. The approach
is an anomaly

“[S]elf-funding …
effectively makes the agency accountable to nobody.”

But
relying on a self-interested CFPB to do the right thing is
a “curious assumption,” especially when the Bureau has
“lack[ed] transparency in much of its decision-making.”

Indeed, freed from fear of budgetary consequences,
the CFPB has repeatedly shown itself indifferent to
oversight from just about anyone.
In testimony before Congress, for instance, the
CFPB’s first director responded, “Why does that matter
to you?” when a congressperson asked who had authorized
hundreds of millions in renovation costs for the Bureau’s
headquarters.

Later, another director told the
House Financial Services Committee that he could
“twiddle [his] thumbs while you all ask questions” because
the CFPB is “not accountable to anybody but itself.” Jim
Puzzanghera, CFPB Chief Mick Mulvaney Says He
Could Just ‘Twiddle My Thumbs’ Before Congress To Highlight Agency’s Flaws, L.A. TIMES (Apr. 11, 2018,
11:55 a.m.), http://bit.ly/3PaQJ6o.

Even Senator Elizabeth Warren
has lamented that her brainchild “ignored congressional
mandates” and operated as a “politicized rogue agency”
when it fell under the control of a political opponent.
Elizabeth Warren, Republicans Remain Silent As
Mulvaney’s CFPB Ducks Oversight, WALL ST. J. (Mar.
28, 2018, 5:48 p.m.), https://bit.ly/3Bh6lQg.

No part of that
recitation captures this situation: an agency endowed with
substantial power, led by a single Director, indefinitely
self-funded through another agency that is itself self-
funded, in permanent control of any funds it obtains, and
expressly exempted from the usual forms of oversight that
come with federal appropriations. That combination of
features is fatal. See Pet.App.37a. It makes the agency
undeniably unique. Markham S. Chenoweth & Michael P.
DeGrandis, Out of the Separation-of-Powers Frying Pan
and into the Nondelegation Fire: How the Court’s
Decision in Seila Law Makes CFPB’s Unlawful Structure
Even Worse, 8/27/2020 U. CHI. L. REV. ONLINE 55, 60
(2020).

And the current director told
Congress that the CFPB’s “base level of funding” is
“guaranteed,” and the agency would only be “subject to
the normal appropriations process” if it needed to ask
Congress for more. Consumer Financial Protection
Bureau Semiannual Report, C-SPAN (Oct. 28, 2021),
https://bit.ly/3iGFC93. In its own words, then, the Bureau
has repeatedly conceded that it neither has nor needs any
congressionally enacted appropriation. Lacking that
element, the Bureau can’t rightfully call itself
constitutional now.

The only remaining question would then be the
remedy. The Fifth Circuit was right to vacate a rule
enacted without constitutional funding. “An agency’s
funding is the very lifeblood that empowers it to act.”
CFPB v. All Am. Check Cashing, Inc., 33 F.4th 218, 241
(5th Cir. 2022) (Jones, J., concurring). And the Bureau
does not convincingly explain how severing some
provision of Section 5497 could provide it with the “proper
appropriation” that is “a precondition to every exercise of
executive authority by an administrative agency.” Id. at
242. So the court appropriately vacated the rule before it.
No money, no power.