The Consumer Financial Protection Bureau (CFPB) Director, Rohit Chopra, was accused by Republican Louisiana Sen. John Kennedy of operating his agency in an illegal manner on Wednesday.
The CFPB is required to operate with funds from the “combined earnings of the Federal Reserve System” in accordance with the Dodd–Frank Wall Street Reform and Consumer Protection Act.
Nevertheless, Kennedy claimed during a CFPB “Semi-Annual Report to Congress” hearing that the Federal Reserve has been “losing money” and has not had any earnings since September 2022.
He stated that this implies that the CFPB is “operating illegally.”
“For the longest time, the Federal Reserve was earning money, but that stopped in September 2022. Now they are losing money. They don’t have any earnings. They’re no longer transferring earnings to the general fund, and the Supreme Court based its decision on saying, this funding scheme is Constitutional under the appropriations clause, by saying that these earnings would go to the general fund from the Federal Reserve so getting them directly from the general fund is no big deal,” Kennedy said.
“I know you don’t like to hear this, but the law is the law. You’ve been operating illegally,” Kennedy later told Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra during a heated exchange.
In May, the Supreme Court determined that the CFPB’s unconventional funding method is constitutional in a 7-2 decision.
In the dissenting opinion, Justice Samuel Alito argued that the ruling could create a precedent in which a federal agency could finance its own agenda without any congressional control or oversight.
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