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Kagan exposes danger lurking in CFPB challenge at Supreme Court

The justice told Trump’s former solicitor general that his argument against the Consumer Financial Protection Bureau was “flying in the face of 250 years of history.”

By

The Supreme Court’s first week of arguments this term featured a case that could upend the structure of government — and Justice Elena Kagan made that clear Tuesday.

“You’re just flying in the face of 250 years of history,” she told Noel Francisco, who served as Donald Trump’s solicitor general and is now in private practice and pushing to crush the Consumer Financial Protection Bureau on behalf of payday lenders.

And what makes the challenge so radical, as Kagan described?

By way of background, the right-wing 5th U.S. Circuit Court of Appeals broke new ground when it deemed the CFPB’s funding structure unconstitutional. The agency is funded through the Federal Reserve, as opposed to annual appropriations from Congress. The panel of Trump-appointed judges said that setup violates the Constitution’s separation of powers and its Appropriations Clause.

Underscoring the unhinged nature of the ruling, President Joe Biden’s solicitor general, Elizabeth Prelogar, explained at the Supreme Court argument that it’s “the first time any court in our nation’s history has held that Congress violated the Appropriations Clause by enacting a statute providing funding.”

Getting into the practical consequences not only for consumer protection but other government programs too, Kagan told Francisco that it “sure seems that on your view, the Federal Reserve would also be unconstitutional.” Underwhelmed by his attempt to distinguish the CFPB from other agencies that could fall if he wins, Kagan went on to add that “the FDIC, the OCC, they also fail your test.” (The OCC is the Office of the Comptroller of the Currency.)

But how likely is the case to wipe out the CFPB and other agencies?

But how likely is the case to wipe out the CFPB and other agencies?

Unlikely, if the oral argument is any guide. Indeed, justices appointed by presidents of both parties sounded reluctant to scuttle the bureau that’s been targeted by Republicans and big business since its creation in 2010 after the Great Recession.

Of course, we’ll see what the court says in its decision, which might not come until later in the term. Opinions are usually all issued by late June, when the most contentious ones come. And given the outlandish nature of the 5th Circuit ruling, we could perhaps find out sooner than that.

But even if the justices don’t take the drastic step leading to the consequences Kagan warned against, that won’t be cause for celebration. Rather, it would simply serve to highlight the extreme nature of the 5th Circuit by comparison — a court that, like the Supreme Court, was made more extreme by Trump and his fellow Republicans, and a court that felt emboldened enough by the current state of the GOP-led judiciary.

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