As reported in Politico’s Morning Money enewsletter, two courts in Texas and Texas Attorney General Ken Paxton, have rejected arguments that the CFPB cannot act because it is funded out of the Federal Reserve’s earnings and the Fed is currently running a deficit. Paxton’s office wrote that the:
argument thus rests on the flawed premise that the CFPB can draw funds only from a Federal Reserve “surplus.” But the relevant statute imposes no such “surplus” limitation. Far from it—the Supreme Court recognized that the statute “authorizes the Bureau to draw money from the combined earnings of the Federal Reserve,” full stop. 601 U.S. at 441 (emphasis added); 12 U.S.C. § 5497 (“combined earnings”). The Federal Reserve’s possession of “surplus funds” (whatever that means) is irrelevant. Moreover, the Bureau can “also retain and invest unused funds from year to year,” 601 U.S. at 422 (emphasis added)—so, even if for some reason the Federal Reserve could not fund the Bureau one year, the Bureau would nevertheless have alternative and legitimate sources of funding.
A federal magistrate court judge also found the argument unpersuasive. And Morning Money describes a similar decision by Federal District Judge Amos Mazzant of the Eastern District of Texas.