The U.S. Court of Appeals for the 2nd Circuit on Thursday ruled that the way in which Congress funds the Consumer Financial Protection Bureau is, in fact, constitutional. The ruling contradicts an opinion published in October by the U.S. Court of Appeals for the 5th Circuit, which held that the agency's funding "violates the Constitution's structural separation of powers." The Supreme Court, which had already agreed to review the 5th Circuit case, will likely resolve the circuit split next year. The argument against the CFPB's constitutionality is simple. The Constitution's appropriations clause requires that monies drawn from the treasury be authorized by "Appropriations made by Law"—a power vested in Congress. Per statute, however, the CFPB funds itself unilaterally, requisitioning funds from the Federal Reserve (limited to 12 percent of the Fed's operating expenses). The CFPB bypassing the congressional appropriations process is an unconstitutional delegation by Congress of its "power of the purse."
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