Gorsuch, Alito break from conservatives on CFPB ruling

by Ella Lee - 05/16/24 11:35 AM ET

Two of the Supreme Court’s most conservative justices broke away from other right-leaning members of the nation’s high court in a decision to preserve the Consumer Financial Protection Bureau (CFPB) — but a third led the majority opinion that sided with the Biden administration.

Justices Samuel Alito and Neil Gorsuch dissented from the Supreme Court’s 7-2 vote upholding the agency’s funding mechanism as constitutional, suggesting that the decision undercuts the most “complete and effectual weapon” at Congress’s disposal: its power of the purse.

“Unfortunately, today’s decision turns the Appropriations Clause into a minor vestige,” Alito wrote. “The Court upholds a novel statutory scheme under which the powerful Consumer Financial Protection Bureau (CFPB) may bankroll its own agenda without any congressional control or oversight.”

Unlike most other federal agencies, which receive funding through annual appropriations, Congress gave the CFPB the power to draw funds from the Federal Reserve System that its director has deemed “reasonably necessary to carry out.” That funding mechanism has long made the CFPB a target of Republican attacks purporting lawmakers have too little control over the agency.

“The Framers would be shocked, even horrified, by this scheme,” Alito wrote.

A separate and also notable break among the justices is that the majority opinion, which sided with the Biden administration, was written by Justice Clarence Thomas, known as one of the Supreme Court’s most conservative justices. He was joined by Chief Justice John Roberts, conservative Justices Brett Kavanaugh and Amy Coney Barrett and the high court’s three liberals.

“Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes,” Thomas wrote.

FILE – Associate Justice Samuel Alito joins other members of the Supreme Court as they pose for a new group portrait, Oct. 7, 2022, at the Supreme Court building in Washington. Alito on Friday, Sept. 8, 2023, rejected demands from Senate Democrats that he step aside from an upcoming Supreme Court case because of his interactions with one of the lawyers, in a fresh demonstration of tensions over ethical issues. (AP Photo/J. Scott Applewhite, File)

“The statute that provides the Bureau’s funding meets these requirements. We therefore conclude that the Bureau’s funding mechanism does not violate the Appropriations Clause,” he continued.

In the majority opinion, Thomas directly addressed arguments raised by the dissenting justices with whom he frequently sides. He suggested that, despite Alito and Gorsuch’s disapproval of the majority’s definition of “appropriations,” they never offer a “competing understanding” of what it means.

“The dissent’s rendition of history largely ignores the historical evidence that bears most directly on the meaning of ‘Appropriations’ at the founding — preratification appropriations laws,” Thomas wrote.

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The justices’ decision caps a battle that marked the biggest legal threat to the CFPB since its establishment in the wake of the 2008 financial crisis to crack down on predatory lending and enforce consumer protection laws.

The challenge to its funding mechanism was brought by two lender trade associations and was backed by all the nation’s Republican state attorneys general.

Zach Schonfeld contributed.

Tags Clarence Thomas Joe Biden John Roberts Neil Gorsuch Samuel Alito