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Conservatives Hope The Supreme Court Undermines The US Consumer Protection Agency

Primary Insurance Amount
Primary Insurance Amount; Source-Forbes

Currently, the U.S. Consumer Financial Protection Bureau is investigating over two dozen cases alleging financial malfeasance on the part of well-known defendants Fifth Third Bank (FITB.O), TransUnion (TRU.N), and Moneygram, among others. But a case currently before the US Supreme Court could jeopardize the watchdog’s survival.

Supreme Court New Term

According to CFPB data, the agency’s 300 or more enforcement actions from 2012 to 22 helped American consumers in the amount of $16 billion, thanks in part to a $3.7 billion settlement with Wells Fargo (WFC.N) last year.

The CFPB faces an existential threat in the case brought by two trade groups that represent the payday loan industry, which will be argued before the justices on October 3 – the second day of the Supreme Court’s new term – and could put an end to the agency’s operations as it continues to police financial wrongdoing.

By the end of June, a decision should be made. In a string of decisions over the past few years, the court’s conservative 6-3 majority has lowered the regulatory authority of federal agencies.

The Phrase “Toughest Financial Protections”

Supreme Court

Source- CNET

The CFPB was established in 2010 by legislation signed by Democratic President Barack Obama, who praised it at the time as a watchdog “charged with enforcing the toughest financial protections in history.”With the backing of the prospect of legal action and financial penalties, the agency was given permission by the Democratic-controlled Congress to monitor the compliance of certain financial firms with federal consumer laws.

Many Republicans have been against the agency from the beginning, arguing that it has too much power and imposes unneeded red tape on banks and other lenders.

Mick Mulvaney, a former Republican congressman who opposed the agency and later served as its acting director under Republican President Donald Trump, is one of its most vocal detractors. In Mulvaney’s first quarter, the agency asked for exactly zero dollars in financing.

While focussing on “regularly identifying and addressing outdated, unnecessary or unduly burdensome regulations,” according to a 2018 CFPB mission statement, it also temporarily paused new enforcement proceedings and stopped hiring.

In court pleadings, the CFPB’s backers said that rejecting its funding model may put other organizations with comparable structures, such as the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and even the Federal Reserve, at risk.

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