Much attention has been devoted to what the D.C. Circuit’s Canning decision could mean for the CFPB’s rulemaking, supervisory and enforcement authority. Now, a Congressman is questioning the decision’s implications for the CFPB’s funding from the Fed.
In a letter to Fed Chair Ben Bernake dated March 8, Republican Congressman Jeb Hensarling, who chairs the House Financial Services Committee, asked for clarification “regarding the transfer of funds to the [CFPB] following the recent [Canning decision].”
Dodd-Frank Section 1017 provides for the Fed’s annual or quarterly transfer of funds to the CFPB in an “amount determined by the Director to be reasonably necessary to carry out the authorities of the Bureau” up to the applicable annual funding cap.
In his letter, Mr. Hensarling stated that “[b]ecause it appears there is not presently a validly-appointed director of the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB’s operations.”
Since a court has not yet ruled that Director Cordray’s recess appointment was invalid, Mr. Hensarling’s statement is a bit of hyperbole. However, the risk that an adverse court ruling could imperil the CFPB’s ongoing funding could be a further incentive for a political solution to be reached.