The Consumer Financial Protection Bureau, an Obama-era consumer watchdog created after the 2008 financial crisis may soon cease to exist.
The Supreme Court recently agreed to examine a ruling made previously by the ultra-conservative Fifth Circuit Court of Appeals which states that the CFPB’s funding is “unconstitutional.” Despite this ruling, the agency has long held the support of the public and according to a poll in December 2022, around 8 out of 10, people supported the watchdog’s mission.
The high court’s ruling could result in the CFPB facing major challenges as they try to continue its focus on predatory lending and enforcing consumer protection laws. The agency was specifically created to protect against the business practices that led to the housing market crash in 2008. If the resources that the agency has on hand get reduced, they might not be able to continue going after large institutions such as Wells Fargo.
In December Wells Fargo settled a CFPB lawsuit through a $3.7 billion suit. The bank was accused of illegally repossessing vehicles, freezing accounts, and having hidden overdraft fees.
Rep. Patrick McHenry (R-NC), chairman of the House Financial Services Committee, supported the court’s decision and stated that the CFPB needed to be brought under the appropriations process. However, critics of the lawsuit have pointed out that it was brought forth by a trade association that has been frequently targeted in the past for its predatory business practices.