The fines collected from business go into an account that is used to directly repay victims.
The CFPB is funded by what is essentially a permanent appropriation that is drawn from the Federal Reserve instead of from the Treasury.
From the Petition for a Writ of Certiorari in this case:
Congress specified that the CFPB would receive up to a capped amount of funding each year from the earnings of the Federal Reserve System. 12 U.S.C. 5497(a). Each year, the Federal Reserve Board transfers to the Bureau “the amount determined by the [CFPB] Director to be reasonably necessary to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made available to the Bureau from the preceding year.” 12 U.S.C. 5497(a)(1). Congress specified that the amount transferred to the CFPB “shall not exceed” 12% “of the total operating expenses of the Federal Reserve System” as reported in 2009, an amount equal to $597.6 million. 12 U.S.C. 5497(a)(2)(A)(iii); see Board of Governors of the Federal Reserve System, 96th Annual Report 2009, at 491 (May 2010). That statutory cap is then adjusted based on a measure of inflation. 12 U.S.C. 5497(a)(2)(B). In fiscal year 2022, the inflation-adjusted amount that the CFPB could receive through this mechanism was approximately $734 million. App., infra, 34a n.12. The CFPB has requested and received approximately $641.5 million this fiscal year. See CFPB, CFO Update Through the Third Quarter of Fiscal Year 2022 (Aug. 23, 2022); CFPB, Funds Transfer Request, FY 2022 Quarter 4 (June 24, 2022).
The money transferred to the CFPB is deposited into a “Bureau Fund” at a Federal Reserve bank. 12 U.S.C. 5497(b)(1)-(2). Congress provided that the money in the Bureau Fund “shall be immediately available to the Bureau” and “shall remain available until expended, to pay the expenses of the Bureau in carrying out its duties and responsibilities.” 12 U.S.C. 5497(c)(1).
Now the question is, does this amount to a Constitutional permanent appropriation, even though it is drawn from the Federal Reserve rather than the Treasury. Permanent appropriations are Constitutionally permissible, except for the purposes of “raising and supporting armies” where the Constitution limits appropriations to two years.
The Solicitor General does make a good case in her brief as to history and precedent being on the side of the CFPB funding mechanism.
I think this case will be close and could go either way.
While I do think the Supreme Court will weaken the administrative state by abolishing Chevron deference, they will likely be more cautious about potentially undoing the CFPB.
