A federal appeals court on Wednesday delivered a blow to the Consumer Financial Protection Bureau, ruling Congress ran afoul of the Constitution when it delegated its financial authority to an executive agency.
The CFPB gets funding directly from the Federal Reserve, not through Congress’ appropriations, which runs afoul of the separation of powers, a three-judge panel from the 5th U.S. Circuit Court of Appeals said.
The 39-page ruling invalidates the Payday Lending Rule, which became effective in 2018. It restricted lenders ability to provide consumers with loans unless they’ve determined they have the ability to repay them according to certain terms, and also restricted a lenders’ account access to repay loans.