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Thursday, December 22, 2022 9:27:27 PM
"The New Civil Liberties Alliance is challenging the constitutionality of CFPB’s funding structure in a case pending in the U.S. Court of Appeals for the Second Circuit. A decision is expected in that case, CFPB v. Law Offices of Crystal Moroney, P.C., at any time. Judge Jones’ opinion is likely to play a major role in the Second Circuit’s deliberations."
https://nclalegal.org/2022/06/judge-jones-stands-up-for-separation-of-powers-principles/
All American Check Cashing is far from the only CFPB target to defend itself by challenging the constitutionality of CFPB’s funding structure. Such challenges have proliferated in the wake of Seila Law. While Judge Jones’s opinion is the first appellate opinion to address the issue, it will not be the last. As noted above, NCLA is challenging CFPB’s funding structure on behalf of a client in a case that will be decided by the Second Circuit in the coming months. That five judges signed onto Judge Jones’s opinion and that no appellate judge has expressed a dissenting view suggest that there is good reason to doubt the constitutionality of CFPB’s funding structure and that the issue will reach the Supreme Court in the years to come.
Moreover, if challengers prevail, the constitutional “fix” will not be easy, and could result in invalidation of significant numbers of CFPB actions. For example, Judge Jones concluded that the proper remedy for the Appropriations Clause violation was dismissal of CFPB’s enforcement action against All American Check Cashing, even though statute-of-limitations issues might prevent a constitutionally rejuvenated CFPB from filing new charges. Id. at *18. She stated that dismissal was warranted because “the separation of powers problem flowing from the CFPB’s budgetary independence concerns the CFPB’s authority to act” and “CFPB lacked authority to use the funds necessary to pursue the enforcement action against All American.” Ibid.
If CFPB targets ultimately prevail in their challenges to CFPB’s funding structure and Congress acts to eliminate the constitutional deficiencies, CFPB’s ability to proceed against those targets may well depend on the reconstituted CFPB’s ability to “ratify” actions taken by the old CFPB. It likely would be many years before the courts could finally resolve those ratification issues.
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