Recent developments have sparked a heated debate regarding the legality of the Consumer Financial Protection Bureau’s (CFPB) funding mechanisms. Last year, Harvard Law School Professor Hal Scott explored this issue in depth during a podcast episode, focusing on the Supreme Court's ruling in CFSA v. CFPB. This decision upheld the agency’s statutory funding structure but raised questions about its legitimacy when Federal Reserve Banks operate at a deficit. The crux of the matter lies in the interpretation of "combined earnings" as stipulated under the Dodd-Frank Act.

Judicial proceedings following the Supreme Court’s decision have further complicated matters. Several enforcement actions initiated by the CFPB faced motions to dismiss due to allegations that the lawsuits were financed through unlawfully procured funds. While three courts rejected these motions, they avoided addressing the central issue—whether “earnings” should be interpreted as profits or revenues. Meanwhile, significant changes occurred within the CFPB after President Trump appointed Russell Vought as Acting Director. His actions effectively dismantled many aspects of the agency, prompting legal challenges questioning the legality of such measures.

In light of these events, Prof. Scott published additional analyses advocating for potential congressional intervention. He suggests that Congress could leverage budget appropriations bills requiring only a simple Senate majority to place the CFPB under the congressional appropriations process. Such reforms would ensure greater accountability and transparency in the agency's financial operations. This evolving saga underscores the importance of clear legislative language and robust oversight mechanisms to uphold the integrity of regulatory bodies tasked with protecting consumer interests.