Bill Clark/CQ Roll Call via AP Images
The CFPB’s effectiveness is inherently tied to its structure; it gets its budget from the Federal Reserve, rather than from congressional appropriators.
There’s an old line from The Simpsons that I think accurately summarizes some of the more pernicious approaches to politics these days. “Kids,” says Homer to Bart and Lisa, “you tried your best, and you failed miserably. The lesson is, never try.”
Certainly, there are some days in politics when it’s tempting to lean in that direction. Virulently conservative courts routinely take laws passed by Democratic Congresses, or agency rules that proceed from those laws promulgated by Democrats, and nullify them based on their own ideological preferences, with the fig leaf of some invented doctrine limply covering those courts’ real motivations. In those moments, “never try” can sound positively reasonable.
But that would give no purpose to politics at all, and rob the nation of the progress that can penetrate the judicial wall.
The Supreme Court’s ruling on Thursday upholding the Consumer Financial Protection Bureau’s funding mechanism, written by none other than Justice Clarence Thomas, is a good example. The doomerist position on the CFPB would be that any new-sounding agency will invariably be tossed out by small-c (and big-C) conservative justices, and the energy expended on defending it would be better put to use elsewhere. Maybe the focus should be put on winning elections to get a better balance of judges, or changing the rules for the judiciary, or homing in on states with Democratic control that would be more receptive to aggressive consumer protection.
That was not warranted in this case. Because the policymakers who created the CFPB decided they would not think several years ahead about the legal implications and talk themselves out of action, millions of consumers have recovered more than $20 billion from financial scams, as the agency has survived one court challenge after another. Tens of billions of dollars more are on the way to the public through agency rulemaking that will limit financial extraction. Consumers won because in 2010, the 111th Congress just went ahead and created an agency that would put the public interest ahead of business interests. The antidote to cynicism, in other words, is governing.
The CFPB’s effectiveness is inherently tied to its structure. It is not funded by congressional appropriators beholden to special interests; it gets its budget from the Federal Reserve, which used to handle consumer protection functions. The CFPB asks for how much it deems necessary to enforce the laws it oversees, capped by Congress at an inflation-adjusted level. This enables the CFPB to be uncorrupted and bold, not looking over its shoulder for how its actions might affect the interests of appropriators.
Such a funding structure, the Supreme Court ruled on Thursday, is totally normal and within the bounds of how appropriations have been conducted since the founding of the country. About 60 percent of the federal budget is appropriated without a specific congressional dollar amount determined, including the agency budgets of several financial regulators. I don’t know that Justice Thomas had to go back to battles between the British parliament and the monarch, or consult multiple dictionary entries, to reach the conclusion that this is legal, but that’s what he did, knocking down the arguments of the payday lender trade group that brought the case.
The ruling should have an immediate effect. When the notoriously right-wing Fifth Circuit claimed that the CFPB’s funding structure was unconstitutional, lower courts across the country put stays on at least ten enforcement cases while the constitutionality of the agency was being adjudicated. In addition, a Texas court issued a preliminary injunction preventing the CFPB’s new rule capping credit card late fees to $8 from going into effect, entirely because of that Fifth Circuit opinion.
The CFPB’s legal odyssey exposed the radical Fifth Circuit and the financial ghouls who brought the case as wildly out of step with the laws and beliefs of the country.
Now that the Court has struck down the Fifth Circuit, the late-fee rule should be allowed to go forward, and those other enforcement cases—against check-cashing operations, predatory lenders, debt collectors, and more—should be resolved, with the agency allowed to do its work enforcing consumer protection laws.
“Now that the CFPB’s funding structure is settled law, every lawsuit clogging up courtrooms with challenges to the agency’s enforcement authority and cost-lowering rules hinging on the outcome of the predatory lenders’ case must be immediately tossed out,” said Caroline Ciccone, president of Accountable.US, a corporate watchdog. “The legal system must allow the Consumer Financial Protection Bureau to fully do its job protecting consumers and lowering costs—and conservatives in Congress should finally get over their obsession with letting Wall Street prey on Main Street to make a quick buck.”
The CFPB’s legal odyssey exposed the radical Fifth Circuit and the financial ghouls who brought the case as wildly out of step with the laws and beliefs of the country. The Supreme Court’s 7-2 ruling punctures the credibility of a circuit court that has become the de facto decision-maker for so much of our financial and economic lives, because business interests opportunistically file their cases within that jurisdiction to ensure that their case will come before the ideologues who sit there. Even those rock-ribbed conservatives on the Supreme Court find the Fifth Circuit to be legally deficient, and each bonkers theory that circuit puts forward makes them even more suspect.
The Supreme Court’s stance was telegraphed at oral arguments, when justices across the political spectrum questioned the Fifth Circuit’s claim that Congress created a perpetual funding mechanism it had no power to alter. Congress can change any law at any time, Brett Kavanaugh pointed out. “You’re just flying in the face of 250 years of history,” Justice Elena Kagan said.
If you get your views on politics from certain corners of the internet, you’d have probably concluded that the CFPB was a dead agency from the moment it was established nearly 14 years ago. Nobody in such a corrupt country would allow something that only tried to prevent consumer rip-offs to exist. These are not only the thoughts of political nihilists but Wall Street itself. It’s what they try to implant into the heads of every policymaker, telling them that their impulses to help people will be fought, challenged, and ultimately shredded.
That shouldn’t dull public servants into complacency. There’s work to do in America, and the public—particularly the voting public—won’t tolerate stories about how policy actions are too complicated and too prone to failure to make the attempt. The Day One Agenda series we did five years ago was predicated on the idea that there are real options for governing if those in power decide to take them. We were told John Roberts would strike them all down. He has done so a couple of times, and may yet do so again. But shrinking from action because one rogue branch might not allow Congress or the president to act would be an abdication of the office. And if you take enough shots on goal, you eventually get important ones through.
In fact, as Graham Steele, a former Senate staffer and Biden Treasury Department official, wrote in one of the first pieces in our Day One Agenda series, policymakers should actually welcome these fights. “Each loss clarifies which side our representatives are on, and each victory would put us on a path toward a more just and equitable financial system.”
In American politics, there are too many excuses made to do nothing. Contra Homer Simpson, the only way forward is to try. And sometimes, you can even win.
