Francis “Trip” Riley, partner at Saul Ewing, LLP, and Marx Sterbcow, managing attorney at The Sterbcow Law Group, LLC, joined October Research, LLC for a webinar titled, “CFPB unconstitutionally funded? What does that mean?” The two experts shared their thoughts on the case as the Supreme Court considered the Consumer Financial Protection Bureau’s (CFPB) petition for writ of certiorari.
Riley began with a thorough background on what cases led up to the one where the Fifth Circuit held the bureau’s payday lending rule was invalid not because there was anything inherently wrong with its rulemaking process, but because the CFPB’s funding structure was an unconstitutional circumvention of the appropriations’ clause.
Sterbcow, who practices in the Fifth Circuit’s jurisdiction (Texas, Louisiana, and Mississippi), gave his perspective of the judges who sit on its bench. He and Riley mentioned how in this and previous cases, like CFPB v. All American Check Cashing, the circuit’s judiciary has intimated the constitutionality argument was persuasive as to whether the bureau’s rules were promulgated correctly. Riley said this may be why the bureau elected to forego an en banc review.
“Six of those judges had already indicated they thought the funding was unconstitutional,” he said. “That would basically be half of the judges that sat the bench at the time. That is why the bureau decided to seek and file a petition for cert with the Supreme Court.”
Sterbcow said the CFPB is unique in being “doubly insulated” in its funding.
“The funding source is an important aspect to differentiate this [case] from the other cases on funding the bureau, in the past, has just wiped away,” he said.
Riley and Sterbcow also discussed how the circuits have approached the constitutionality question, what it means for past CFPB rules and actions, and how the industry should do business until the matter is resolved.
Want to brush up on the issues and hear more from these two experts? Watch the webinar, available for purchase now (free for subscribers).