Noah Feldman, Columnist

Conservative Attack on Consumer Protection Wins an Illogical Victory

The Fifth Circuit is singling out the CFPB for destruction, but its reasoning would make the Fed unconstitutional, too.

October 21, 2022 at 2:50 PM UTC

Noah Feldman is a Bloomberg Opinion columnist. A professor of law at Harvard University, he is author, most recently, of “To Be a Jew Today: A New Guide to God, Israel, and the Jewish People."

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Conservatives have never liked the Consumer Financial Protection Bureau, the brainchild of Massachusetts Senator Elizabeth Warren. Now a conservative panel of the conservative US Court of Appeals for the Fifth Circuit has struck down the CFPB’s rulemaking authority using a novel theory.

The court held that the mechanism Congress established to fund the bureau through the Federal Reserve is unconstitutional — even though it’s effectively the same as the mechanism used to fund the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration and the Federal Housing Finance agency, not to mention the Fed itself. The decision is logically almost indefensible, and the Supreme Court will now have to weigh in in order to overrule it, unless it wants to call into question the constitutionality of the rest of the financial regulatory state.