News Release: Payday Lender, Eastman Briefs Highlight Weak Legal Case Against CFPB


July 7, 2023

William Pierre-Louis, Jr.
(347) 499-7874

Payday Lender, Eastman Briefs Highlight Weak Legal Case Against CFPB

Washington, D.C. — Briefs filed by the payday lending lobby and John Eastman, the lawyer who tried to help former President Trump overturn the 2020 election, highlight the extremely weak legal case that this predatory industry has against the funding of the Consumer Financial Protection Bureau, a vital federal agency that polices the financial services market on behalf of everyday people. 

“The CFPB is not under threat because there are constitutional problems with this agency,” said Kimberly Fountain, consumer financial justice field manager for Americans for Financial Reform. “The payday lending lobby brought this case – and got support from fringe legal groups – precisely because the CFPB is effective at its job of cracking down on abuses by big banks and predatory lenders. It has put billions back in consumers’ pockets.”

The Community Financial Services Association, a lobby group for payday lenders, and the Center for Constitutional Jurisprudence, of which Eastman is president, filed documents on the case this week. A third group, the right-wing Atlantic Legal Foundation, also submitted a brief supporting the payday lenders.

The Supreme Court case, which was added to the fall term’s docket in February, involves a challenge by CFSA to a 2017 regulation protecting consumers from predatory loans. The group argues, contrary to all precedent, that a congressional decision to fund CFPB via the Federal Reserve, is unconstitutional. Despite the legal pressure, the CFPB has continued to fulfill its mission of protecting consumers and has won $17.4 billion in restitution, canceled debts, and other forms of relief for consumers since its inception.

Eastman’s organization, in keeping with the main thrust of the payday lender lobby’s argument,  tries to argue that CFPB’s funding violates the Appropriations Clause of the Constitution. The argument is baseless, as Congress has appropriated money to the agency via a formula laid out in the Dodd-Frank law of 2010. Many other federal agencies receive their funding through channels other than the annual appropriations process. CFSA brought the case in the Fifth Circuit, a notoriously right-wing redoubt of the federal judiciary; in a separate case before the Second Circuit Court, a Trump-appointed judge rejected CFSA’s arguments.

“The involvement of Eastman’s organization underscores the extent to which efforts to destroy the CFPB are rooted in extreme legal theories that have no basis in law or history,” Fountain said. “The Supreme Court should decisively reject this challenge to the CFPB funding mechanism.” 

Eastman is now facing multiple investigations over his role in trying to overturn the 2020 election, including a hearing in California on whether to strip him of his law license. He repeatedly advised – incorrectly – former President Donald Trump that Vice President Mike Pence had the constitutional authority to block the certification of President Biden’s clear victory.

In a wave of pro-CFPB amicus briefs earlier this Spring that describe how the Fifth Circuit’s decision is wrong on the law and has no basis in the Constitution, law, or Supreme Court precedent, members of Congress, public interest groups and legal experts argued that maintaining the integrity and effectiveness of the CFPB is crucial in ensuring consumer financial protection and upholding fair practices in the financial sector. These groups outlined how attempts to erode the CFPB’s authority through misguided interpretations of the Constitution could have far-reaching consequences for consumers, other federal agencies, and the stability of the broader financial system.