Upheld by Supreme Court, CFPB director says bureau will increase staff, consider new rules on banks – Winnipeg Free Press

NEW YORK (AP) — Since its creation about 14 years ago, the Consumer Financial Protection Bureau has faced lawsuits and political and legal challenges over whether the aggressive consumer agency Federal government consumer financial oversight should be allowed to exist.

Those challenges ended this week, when the Supreme Court ended the last major legal challenge to the bureau’s authority, ruling 7-2 that the CFPB could actually draw its budget from the Federal Reserve instead of the annual Congressional appropriations process.

The opinion reversed a lower court’s ruling and drew praise from consumer advocates, as well as some in the banking industry, who argued that upending 14 years of the bureau’s work would cause chaos in the financial system.

Now cleared of legal ambiguity, CFPB Director Rohit Chopra told reporters Friday that the bureau plans to hire additional investigators and has already filed legal motions in a dozen ongoing cases against accused companies of wrongdoing that was delayed due to the Supreme Court case. .

“The court’s decision makes it clear that the CFPB is here to stay,” Chopra said. “The CFPB will now be able to continue its law enforcement work.”

Chopra and other top CFPB officials have said they plan to boost the size of the bureau’s enforcement bureau, likely to reach a staff of 275 people. The bureau plans to address other issues such as pawnbrokers, medical billing, credit reporting and financial data issues through its rules. do authorities also.

The CFPB, the brainchild of Democratic Sen. Elizabeth Warren of Massachusetts, was created after the 2008 financial crisis to regulate mortgages, auto loans and other consumer financing. Republicans and their backers have long opposed it.

In short, the case considered by the Supreme Court on Thursday posed an existential threat to the office. The case, CFPB v. Community Financial Services Association of America, was brought by payday lenders who object to a bureau rule that limits their ability to withdraw funds directly from borrowers’ bank accounts.

CFSA, the payday lending industry lobbying group and a longtime target of the CFPB, had argued that the way the bureau was funded was unconstitutional. Lower courts, including the notoriously conservative Fifth Circuit Court of Appeals, have taken up the payday lending industry’s argument to question the legality of the CFPB’s work over the past decade.

The bureau’s enforcement work is one of the most important parts of the CFPB’s operations. Since its creation, the bureau has returned more than $20 billion to consumers and fined banks billions of dollars for wrongdoing. For that reason, this case also stifled the CFPB’s ability to do its job, bureau officials told reporters. Several companies did not respond to the CFPB’s requests for investigation, citing the pending Supreme Court case.

A CFPB official described the matter as a “cloud” hanging over the bureau’s enforcement office.

Of the 14 cases that have been stayed by lower courts, about half of them involve payday lenders or other financial services companies accused of violating laws such as the Military Lending Act, designed to protect the military against abusive financial products. often sold near the bases. These cases will now move forward, the office said.