What the Supreme Court Ruling Means for Other Consumer Bureau Actions

The Supreme Court’s ruling on Thursday upholding the Consumer Financial Protection Bureau’s funding mechanism will clear the way to resume a score of court cases that involve the agency but were frozen during the legal challenge, potentially including new rules for payday lenders and penalties against a money transmitter. But the ruling falls far short of eliminating the bureau’s legal obstacles.

Immediately after the ruling was announced, lawyers for the bureau, which is charged with preventing consumer abuse in the financial industry, began preparing dozens of legal filings to try to unfreeze its activities. Among them are requests to federal judges to end stays on new rules and on subpoenas to financial firms. While the Supreme Court’s ruling should resolve a few of the stays, the bureau will still struggle to overcome other roadblocks.

“The C.F.P.B. has now put all the existential threats to bed, but the next phase of this is the trench warfare of fighting the industry rule by rule,” said Graham Steele, a longtime financial regulation lawyer and former Treasury Department official.

He noted that Justice Samuel A. Alito Jr.’s dissent cited three recent consumer bureau actions that, in Justice Alito’s view, would be “major changes” in consumer protection law. “Congress did not specifically authorize any of them,” the justice wrote.

That language signals probable challenges under the “major questions doctrine,” a fairly new but increasingly invoked legal principle that bars agencies from undertaking politically or economically significant actions without explicit approval from Congress.

The bureau’s troubles are most likely to continue in part because of rulings from the U.S. Court of Appeals for the Fifth Circuit, where financial industry trade groups have filed a flurry of lawsuits challenging the agency’s actions. For several years, federal judges in the Fifth Circuit, which encompasses Texas, Louisiana and Mississippi, have been freezing or striking down bureau actions using broad rulings, and the appeals panels have most often upheld or even expanded on those lower-court rulings.