On October 27, 2022, Jonathan Pompan was quoted in Inside Mortgage Finance on the Fifth Circuit Court of Appeals’ opinion finding that the Consumer Financial Protection Bureau’s (CFPB) funding structure is unconstitutional. According to the article, the opinion — which is binding on federal district courts in Texas, Louisiana and Mississippi — puts the CFPB in an awkward position, given that anything it has done since it was created has been accomplished using that funding mechanism.
Pompan said he thinks “all roads lead to the Supreme Court, and potentially Congress having to weigh in.” And while it’s possible the Supreme Court ends up passing the ball to the legislature after considering the case, Congress can also act at any point if wants to change the bureau’s funding mechanism.
“Ultimately, there’s a potential that any fix related to funding, especially one that comes from Congress, will … end up addressing the single-director structure of the bureau as well,” he said.
Other flies in the ointment for the bureau, Pompan noted, are other lawsuits based on the Fifth Circuit’s opinion. Some companies facing bureau enforcement actions are already seeking dismissal based on the Fifth Circuit’s opinion, he said. “And those decisions will come far sooner than the ultimate conclusion of this chapter of the debate over the CFPB’s existence. This is very much a start, not the end, of what is to come.”