The fate of a post-2008 watchdog meant to protect Americans from another financial crisis is in the hands of a conservative Supreme Court

• The Supreme Court will take on a lower court's decision that the Consumer Financial Protection Bureau's funding structure is unconstitutional.
• The court argued the agency's funding should require Congressional approval. It's currently funded by the Federal Reserve.

The fate of a consumer watchdog championed by progressives lies with a conservative-majority Supreme Court.

On Monday, the Supreme Court agreed to take a decision from the Fifth Circuit Court of Appeals, which ruled in October that the Consumer Financial Protection Bureau's (CFPB) funding structure is unconstitutional.

The three-judge panel — all appointed by former President Donald Trump — wrote in their ruling that the CFPB gets funding from the Federal Reserve, when it should be getting funding approval through Congressional legislation.

"Wherever the line between a constitutionally and unconstitutionally funded agency may be, this unprecedented arrangement crosses it," the judges wrote in their decision.

The Supreme Court won't hear the case until next term, though, meaning a final decision isn't likely until the spring of 2024.

Created in 2011 under former President Barack Obama, the CFPB was intended to protect Americans from another financial crisis following the 2008 recession. Championed by progressives like Sen. Elizabeth Warren, who helped create the agency, the CFPB has cracked down on big banks and the student-loan industry in particular. For example, the agency hit a student-loan company last year with a $1 million fine for deceiving student-loan borrowers with privately-held student-loans, and it sued for-profit schools accused of fraud.

Still, Republican lawmakers and conservatives have questioned how the agency functions in the past. In 2020, the Supreme Court ruled that the CFPB's director was not immune from presidential oversight, and Chief Justice John G. Roberts Jr. also mentioned the agency's funding structure in his decision.

"Unlike most other agencies, the CFPB does not rely on the annual appropriations process for funding," Roberts wrote. "Instead, the CFPB receives funding directly from the Federal Reserve, which is itself funded outside the appropriations process through bank assessments."

Rep. Patrick McHenry, Chairman of the House Committee on Financial Services, said in a statement that "as Republicans have said for years, the CFPB's unconstitutional funding structure improperly insulates it from Americans' representatives in Congress."

President Joe Biden's administration and Democratic lawmakers have continued to push back on the Fifth Circuit's decision. Solicitor General Elizabeth B. Prelogar wrote to the Supreme Court that the lower court's "novel and ill-defined limits on Congress's spending authority contradict the Constitution's text, historical practice, and this Court's precedent."

Warren, who called the Fifth Circuit's decision "lawless and reckless" in October, said in a Monday statement that "if the Supreme Court follows more than a century of law and historical precedent, it will strike down the Fifth Circuit's decision before it throws our financial markets and economy into chaos."