"Judge Davila agreed. He found that Vought's interpretation frustrates Congress's intent to insulate the Bureau's funding stream from this transparent display of partisanship. The judge noted that Vought said publicly this past October that he was working to close down the agency and would be successful within months."
"Unlike most government agencies, the CFPB doesn't get its money from Congress through annual appropriations. Instead, it's funded directly from the Federal Reserve, which raises money through bank fees and other activities. Current law states the Fed shall transfer money to the CFPB from the combined earnings of the Federal Reserve System."
"The court declared that Vought's reliance on the legal opinion was arbitrary, capricious and in violation of law, and ordered the CFPB to keep requesting money from the Federal Reserve as the law requires."
The CFPB, created after the 2008 financial crisis, receives funding directly from the Federal Reserve rather than through congressional appropriations. Acting director Vought sought a legal opinion on the meaning of "combined earnings," which the Office of Legal Counsel interpreted as profits only. Based on this interpretation, Vought refused to request Fed funding and instead asked Congress directly, effectively attempting to defund the agency. Three nonprofit groups sued, arguing this interpretation violated congressional intent. Judge Davila agreed, finding Vought's approach arbitrary and capricious, noting Vought had publicly stated his goal to close the CFPB. The court ordered the agency to continue requesting Federal Reserve funding as required by law.
#cfpb-funding-dispute #dodd-frank-act-interpretation #federal-reserve-financing #administrative-law-litigation
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