Lone Candle

“The Supreme Court delivered a firm and unambiguous rebuke to some of America’s most reckless judges on Thursday, ruling those judges were wrong to declare an entire federal agency unconstitutional in a decision that threatened to trigger a second Great Depression.
In a sensible world, no judge would have taken the plaintiffs arguments in CFPB v. Community Financial Services Association seriously. Briefly, they claimed that the Constitution limits Congress’s ability to enact “perpetual funding,” meaning that the legislation funding a particular federal program does not sunset after a certain period of time.

The implications of this entirely made-up theory of the Constitution are breathtaking. As Justice Elena Kagan points out in a concurring opinion in the CFPB case, “spending that does not require periodic appropriations (whether annual or longer) accounted for nearly two-thirds of the federal budget” — and that includes popular programs like Social Security, Medicare, and Medicaid.

Nevertheless, a panel of three Trump judges on the United States Court of Appeals for the Fifth Circuit — a court dominated by reactionaries who often hand down decisions that offend even the current, very conservative Supreme Court — bought the CFPB plaintiffs’ novel theory and used it to declare the entire Consumer Financial Protection Bureau unconstitutional.

In fairness, the Fifth Circuit’s decision would not have invalidated Social Security or Medicare, but that’s because the Fifth Circuit made up some novel limits to contain its unprecedented interpretation of the Constitution. And the Fifth Circuit’s attack on the CFPB still would have had catastrophic consequences for the global economy had it actually been affirmed by the justices.

That’s because the CFPB doesn’t just regulate the banking industry. It also instructs banks on how they can comply with federal lending laws without risking legal sanction — establishing “safe harbor” practices that allow banks to avoid liability so long as they comply with them.

As a brief filed by the banking industry explains, without these safe harbors, the industry would not know how to lawfully issue loans — and if banks don’t know how to issue loans, the mortgage market could dry up overnight. Moreover, because home building, home sales, and other industries that depend on the mortgage market make up about 17 percent of the US economy, a decision invalidating the CFPB could trigger economic devastation unheard of since the Great Depression.

Thankfully, that won’t happen. Seven justices joined a majority opinion in CFPB which rejects the Fifth Circuit’s attack on the United States economy, and restates the longstanding rule governing congressional appropriations. Congress may enact any law funding a federal institution or program, so long as that law “authorizes expenditures from a specified source of public money for designated purposes.””

https://www.vox.com/scotus/24158216/supreme-court-cfpb-clarence-thomas-community-financial