A three-judge panel of the US Court of Appeals for the Fifth Circuit ruled on October 19 that the current funding mechanism for the Consumer Financial Protection Bureau (CFPB) is unconstitutional. Specifically, in Community Financial Services Association of America v. Consumer Financial Protection Bureau, the court held that the CFPB’s independent funding through the Federal Reserve System violates the Appropriations Clause of the Constitution and the underlying separation of powers principles. On this basis, the court also invalidated the remaining portions of the CFPB’s restrictions on lenders offering payday, auto title and other short-term, high-interest instalment loans. Read our alert here.