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A Brief Essay On The Constitutionality Of The Consumer Financial Protection Bureau

December 1, 2013
By Eric Pearson

This essay, written by Creighton University School of Law professor and associate dean Eric Pearson, examines how the Consumer Financial Protection Bureau violates constitutional principles.

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This essay, written by Creighton University School of Law professor and associate dean Eric Pearson, examines how the Consumer Financial Protection Bureau violates constitutional principles, as traditionally understood.

CFPB, as configured by lawmakers, is unaccountable to lawmakers and other parts of the federal government, Pearson writes.

“In configuring the CFPB, Congress drew liberally from Treasury’s recommendations but departed from those recommendations in certain significant particulars,” Pearson wrote. “First, the CFPB would be an executive rather than an independent agency, which means the agency would be led by a single person rather than by a board or panel. That person, moreover, would be removable by the President for good cause only. Second, Dodd-Frank ‘one-upped’ the Treasury Department's proposal for stable agency funding by providing for the CFPB to be entirely self-funding. As currently configured, the agency allocates funds to itself essentially in amounts it chooses.

Pearson writes that CFPB’s unconstitutionally gained power grows at the expense of other, constitutionally established branches of government.

“Simply put, the CFPB can diminish any of the three branches as it likes,” Pearson wrote. “With respect to the Congress, it can undercut and usurp a legislative priority or the realization of a Congressional goal by its unilateral initiatives. It can, without fear of opposition, fundamentally reorder the vast financial sector of the private economy. Such an imposing authority cannot be justified even by functionalists' preference for according agencies flexibility adequate to promote responsive and creative regulation. The interest in flexibility is surely legitimate in the absolute, but it is not one of the first principles upon which the Nation is founded. The Nation's first principles, rather, are those embodied in the Constitution, not those appealing to the Congress at any point in time.”