House Financial Services Committee Chair Challenges CFPB Funding

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House Financial Services Committee Chairman Jeb Hensarling (R-Texas) sent a letter March 8 to Federal Reserve Board Chairman Ben Bernanke challenging the Fed's funding of the Consumer Financial Protection Bureau. Hensarling's challenge was based on the recent decision of the U.S. Circuit Court of Appeals for the D.C. Circuit in Canning v. National Labor Relations Board holding President Barack Obama's recess appointments of three NLRB commissioners to be "constitutionally invalid." (Read our alert on the Canning decision here.)

Chairman Hensarling wrote: "I anticipate that a federal court will soon reach a similar conclusion with respect to the validity of Mr. Cordray's appointment." Because the Dodd-Frank Act of 2010 provides that the Federal Reserve can transfer funds to carry out the operations of the CFPB only at the request of its director, Chairman Hensarling said, "I question the circumstances under which the [Federal Reserve] Board may lawfully fund the CFPB's operations."

For more information about the content of this alert, please contact Michael Mallow or Michael Thurman.