Consumer Financial Services practice Leader Scott Pearson spoke with The National Law Journal and multiple other publications about the possible implications for the Consumer Financial Protection Bureau if the U.S. Supreme Court sides against the agency in a lawsuit contesting the constitutionality of its funding source.
In Consumer Financial Protection Bureau v. Community Financial Services Association of America, the US Court of Appeals for the Fifth Circuit determined that Congress giving “power of the purse” to the CFPB is unconstitutional and violates separation of powers protections. Pearson said the Supreme Court may lean in favor of this argument.
“A majority of the Court is going to be receptive to separation of powers arguments,” Pearson said. “The question is, how far is the Court likely to go?”
Though it’s possible that the Court’s decision could spell the end for the CFPB, Pearson said companies have invested millions in complying with the Bureau’s regulations in the more than 10 years since its creation, so some financial services companies might prefer to reform rather than abolish the agency.
“In terms of getting rid of the agency, redoing compliance systems that have been set up, I don’t think there’s much of an appetite for that,” he said.
The National Law Journal subscribers can read the full article here.
Pearson was also featured in Supreme Court Brief and Banking Dive.