Center Files Amicus Brief Defending the CFPB on Behalf of 90 State & Local Nonprofit Organizations

May 15, 2023

Writing on behalf of 90 state and local nonprofit organizations, the UC Berkeley Center for Consumer Law & Economic Justice today filed an amicus brief in the United States Supreme Court arguing that the Consumer Financial Protection Bureau’s independent funding mechanism does not violate the Appropriations Clause of the U.S. Constitution. Alone among briefs filed in the case, the Center’s brief adduces not just similarly structured federal agencies over the last two centuries, but also a broad array of independently funded state regulators. The brief concludes that a practice that is so well established and widespread is not likely to conflict with either state constitutions' appropriations provisions or the U.S. Constitution’s Appropriations Clause.  


The CFPB regulates the wide-ranging consumer debt industry, from mortgage lenders to credit card companies to student loan servicers. Since its creation in 2010 in the Dodd-Frank Act, the Bureau has recovered over $15.5 billion for consumers who have fallen victim to predatory financial practices, and it has issued many critical regulations to ensure fair access and opportunity in the financial marketplace. Under Dodd-Frank, the Bureau requests its annual funding not from Congress but from the Federal Reserve, which itself raises funds from assessments it levies on financial institutions nationwide. Today, there are abundant examples of independently funded federal agencies like the CFPB, from financial regulators including the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (and the Fed itself) to the Farm Credit Administration and the U.S. Post Office. What is more, there are copious examples of similarly structured agencies appearing and thriving among the States. 

The Fifth Circuit Court of Appeals, however, ruled that the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution, which provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The Appropriations Clause epitomizes Congress’s power of the purse––a key principle in maintaining the separation of powers that makes sure that the executive branch spends taxpayer money only after the legislature enacts a law dictating how that money should be spent. Until the Fifth Circuit’s decision in this case, no court had ever struck down a federal law authorizing spending as a violation of the Appropriations Clause. Notably, multiple federal appellate and district courts, including most recently the Second Circuit in March, have held that Congress plainly satisfied its constitutional duty under the Appropriations Clause when it enacted the Dodd-Frank Act. The Fifth Circuit’s decision is therefore fully at odds with these cases and with decades of precedent, including from the U.S. Supreme Court, about what constitutes a constitutional appropriation. 

The Center’s Brief

The Center’s amicus brief in CFPB v. Community Financial Services Association of America, filed on behalf of 90 state and local nonprofit organizations from 34 states and the District of Columbia, asserts that the CFPB’s funding scheme in the Dodd-Frank Act is constitutional. The broad swath of organizations joining the brief as amici advocate for economic justice in a vast variety of areas, from student loans to housing to debt collection to credit reporting–a range that reflects the breadth and signal importance of the CFPB's work.

The brief argues that the CFPB’s funding structure is echoed not only among other federal agencies but also, crucially, in dozens of independent state regulatory agencies across the country. Since long before Congress created the CFPB, the States have created regulatory agencies with self-sustaining funding mechanisms that do not require allocation of taxpayer money. At the same time, nearly every State in the country has an appropriations provision in its state constitution that essentially matches word-for-word the Appropriations Clause in the U.S. Constitution. 

Crucially, despite reviewing records from all fifty States, the Center could not find a single judicial decision that disapproved of an independently funded state agency as a violation of the State’s appropriations clause.

As the brief describes, the CFPB’s funding scheme is therefore an unexceptional federal and state practice to provide fiscal autonomy to particular government agencies. The brief points to examples of specific independently funded regulators across the country and shows how the legislatures that created those agencies and designed them to be self-funded through valid, constitutional appropriations. For example, the Indiana Department of Financial Institutions, which conducts important consumer protection work overseeing the state financial industry (not unlike the CFPB’s work on a national level), is fully funded by assessments that it levies on financial institutions; the department receives no taxpayer money. Likewise, the Wyoming Game and Fish Commision, which administers the state’s wide-ranging wildlife laws, is funded solely on license fees. None of this panoply of agencies has ever run afoul of constitutional appropriations principles.

Because state courts often look to the U.S. Supreme Court’s decisions on the federal Constitution to interpret their own constitutions and identically worded appropriations clauses, the brief warns that a decision disapproving of the CFPB’s financial structure could prompt a seismic shift in how the States are permitted to set up and operate their own agencies.