The conservative Supreme Court could soon eviscerate a key part of Congress response to the 2008 global financial crisis, with payday lenders challenging the constitutionality of the Consumer Financial Protection Bureau in one of the first hearings of the courts new term.

In its challenge to the CFPB, the Community Financial Services Association of America, a trade association for the payday lending industry, argues that the agencys funding through the Federal Reserve is unconstitutional under the Constitutions appropriations clause. It is the latest attack on the CFPB by the financial industry following a 5-4 decision in the 2020 case of Seila Law v. CFPB , which allowed the president to fire the CFPB director at will instead of giving them a defined six-year term.

Originally conceived of by now-Sen. Elizabeth Warren (D-Mass.) before she entered politics, Congress created the CFPB as part of the Dodd-Frank financial reform law in 2010. That law housed the CFPB inside the Federal Reserve and provided for it to be funded by up to 12% of the Feds 2009 operating costs expenses that top out at $597.6 million per year. The CFPB director must also appear before Congress biannually to justify the agencys programs and budget.

But the payday lenders claim that the appropriations clause requires the CFPB to be funded through annual appropriations alone and not through continuous funding mechanisms. In addition, the payday lenders, which have vociferously opposed a CFPB rule prohibiting illegal debits from bank accounts, want all enforcement and regulatory actions taken by the agency since its inception to be voided. The payday lenders, whose Supreme Court case is set to begin Tuesday, are supported in their push to gut the CFPB by 33 Republicans in the Senate, 99 Republicans in the House , 27 Republican state attorneys general , and big business lobbying groups like the Chamber of Commerce .

The problem with their argument is that it flies in the face of the text and history of the appropriations clause. The clause states, No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law. Nowhere, however, does the clause state that appropriations must be made through the annual appropriations process.

Indeed, Congress has funded agencies in a similar manner to the CFPB going all the way back to the founding of the country. The Customs Service, the very first agency Congress created, was financed by an indefinite stream of funds collected through fees. The same was true of the Postal Service, then the largest component of the federal bureaucracy, and hundreds of agencies and programs created throughout the 18th and 19th centuries.