On May 16, the U.S. Supreme Court rejected the notion that the way the operations of the Consumer Protection Finance Bureau (CFPB or Bureau)—a powerful regulatory agency created by Congress to protect fair treatment of consumers after the 2008 Financial Crisis—are financed runs afoul of the so-called Appropriations Clause of the Constitution. That Clause, housed in Article I, § 9, provides in relevant part that “No money shall be drawn from the treasury, but in consequence of appropriations made by law.” Challengers to the CFPB argued that because, under the Dodd-Frank statute creating and empowering the CFPB, the Bureau receives its operating monies from the earnings of the Federal Reserve System rather than via a yearly budget law approved by Congress, the strictures of the Appropriations Clause have not been respected. They won on this argument in the lower court.

But last week, the Supreme Court, in Consumer Financial Protection Bureau v. Community Financial Services Association of America, Ltd., reversed. In an opinion of the Court for himself and six other Justices, Justice Clarence Thomas explained that:

Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes. The statute that provides the Bureau’s funding meets these requirements. We therefore conclude that the Bureau’s funding mechanism does not violate the Appropriations Clause.

The ruling was, predictably, cause for celebration among fans of the Bureau, including its chief congressional architect, Senator Elizabeth Warren (D-MA). But in an op-ed in this week’s Wall Street Journal, Emeritus Harvard Law Professor Hal Scott (a colleague of Senator Warren when she served on the Harvard Law faculty) wrote the following:

Not so fast. It’s true that CFPB v. Community Financial Services Association of America, a 7-2 decision . . . held that the Constitution’s Appropriations Clause authorizes Congress to fund the bureau with profits from the Federal Reserve. The Appropriations Clause requires that any money “drawn from the Treasury” be pursuant to “appropriations made by law.” Justice Thomas observe[d] that under the Federal Reserve Act, “surplus funds in the Federal Reserve System would otherwise be deposited into the general fund of the Treasury.” Since the money would otherwise have gone to the Treasury, it counts as having been “drawn from the Treasury” and therefore the law redirecting it complies with the Appropriations Clause. But for nearly two years the Fed has been losing money because of rising interest rates. Even if the Fed can justify [continued] payment [in recent years under the terms of] the Dodd-Frank statute, the constitutional problem remains. Since the Treasury no longer receives any surplus from the Fed, central-bank funding can no longer be considered “drawn from the Treasury.” This means the agency can’t rely on the Appropriations Clause—or last week’s decision by the high court—to justify the legality of its continued operations. That calls into question the legitimacy of the CFPB’s funding since September 2022—and all regulations issued during that period. The CFPB’s dramatic victory may turn out to be a stunning defeat [emphasis added and some sentences reordered for clarity].

Before I analyze Professor Scott’s take on the case, let me say that I have not always been a fan of what I see the CFPB doing. But putting that to one side, and with all due respect to Professor Scott (whom I do not know but who seems to be a true leader in his regulatory fields), the notion that last week’s case could end up being a defeat for the CFPB is simply wrong, and it reflects a failure to read the Court’s opinion carefully and to understand constitutional law basics. That is not to say that the ruling last week insulates the CFPB from future challenges based on other constitutional claims, but Professor Scott’s contention that the decision (combined with changes in the real world) could itself enable another challenger to succeed against the CFPB on a claim based on the Appropriations Clause is wide of the mark.

The fundamental problem with Professor Scott’s argument is his apparent belief that the Appropriations Clause was, in the eyes of the Court, a shield successfully invoked by the CFPB to justify the Bureau’s funding. It was no such thing. The Court found only that the Appropriations Clause was not the sword that the challengers thought it was. In this respect, Professor Scott’s logical mistake is in suggesting that the Bureau “rel[ied] on the Appropriations Clause . . . to justify the legality of its continued operations.” Instead, the Bureau simply defeated the notion that the Appropriations Clause was something on which the challengers could rely.

To see the point another way, note that the Court invoked the fact that Federal Reserve surplus funds not given to the CFPB would otherwise have been deposited with the Treasury only to make clear that the Bureau’s funding mechanism must adhere to requirements of the Appropriations Clause (whatever those requirements might be):

As a threshold matter, the parties agree that the Bureau’s funding must comply with the Appropriations Clause. The Appropriations Clause applies to money “drawn from the Treasury.” Art. I, §9, cl. 7. The Bureau draws money from the Federal Reserve System. 12 U. S. C. §5497(a)(1). And, surplus funds in the Federal Reserve System would otherwise be deposited into the general fund of the Treasury. §289(a)(3)(B). Whatever the scope of the term “Treasury” in the Appropriations Clause, money otherwise destined for the general fund of the Treasury qualifies (emphasis added).

To repeat, Professor Scott suggests that money directed from the Federal Reserve to the Bureau in years where there is no Fed surplus is not money “drawn from” the Treasury, since that Bureau-funding money would never have been deposited in the Treasury. (In this regard, it appears that only Fed surpluses, and not all Fed revenues, are placed in the Treasury general fund). But even if his suggestion here is correct—and that itself might be debatable—all that means is that any Appropriations Clause challenge against CFPB funding would be all the weaker, since the limitations of the Clause simply wouldn’t be applicable in the first place. To the extent that Professor Scott is suggesting that Clause has any application to funds not drawn from the Treasury, he is not reading constitutional text or the Court’s own words very carefully.

Of course, the Appropriations Clause isn’t the only constitutional game in town, and someone might make other constitutional arguments against the CFPB. But the meaning of the Appropriations Clause is the only question the challengers raised, the only one that was at issue in last week’s case, and thus the only one to which last week’s ruling speaks.

Indeed, the Court made itself quite clear on these points:

The [challengers, in arguing that the Appropriations Clause requires more active Congressional oversight than occurred here] err by reducing the power of the purse to only the principle expressed in the Appropriations Clause. To be sure, the Appropriations Clause presupposes Congress’ powers over the purse. But, its phrasing and location in the Constitution make clear that it is not itself the source of those powers. [Emphasis added]. The Appropriations Clause is phrased as a limitation: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” . . . And, it is placed within a section [Article I, § 9] of other such limitations [such as] “No Bill of Attainder or ex post facto Law shall be passed”) and “No Tax or Duty shall be laid on Articles exported from any State, [to be contrasted with Article I, § 8, which provides that] ”“The Congress shall have Power To . . . ”). The [challengers] offer no defensible [theory] that the Appropriations Clause [limitations] require[] more than [that Congress specify the purposes for which identified funds should be used]. Without such a theory, the [challengers’] Appropriations Clause challenge must fail.

Thus, although there might be other constitutional claims (besides violation of the Appropriations Clause) that people might try to raise against the way the Bureau is funded, last week’s opinion can never be invoked to affirmatively support such claims. (Indeed, the Court’s unwillingness to smuggle into the Appropriations Clause requirements not supported by historical practice tends to cut, at least to some extent, against other claims.)

Although I offer no firm opinion on the force of other kinds of constitutional arguments that may be advanced against the Bureau, I do note that Professor Scott, like the challengers last week, offers nothing beyond the (now debunked) invocation of the Appropriations Clause. In the event that Professor Scott might think that expenditure of federal monies that are not drawn from the Treasury (as he defines the Treasury) is inherently unconstitutional, he would need to flesh out that argument. He would also need to explain why (under his own terms) the Federal Reserve itself is able to operate and spend money from its revenues these days, since (as pointed out above) federal statutes seem to require that only the Fed’s surplus, and not all Fed revenues, be deposited in what Professor Scott defines as the Treasury. In any case, and most importantly, such an argument has nothing to do with last week’s ruling,

I should also note that, at a more basic constitutional level, the Bureau’s statutory responsibilities (of consumer protection) seem to be amply supported by several of Congress’s powers (including the power to regulate commerce among the several states), and the federal government’s general ability to spend money even when it is running a deficit seems obviously permissible given that Congress has been given the power to borrow money on the credit of the U.S.

In addition to constitutional claims, someone might challenge as a statutory violation the CFPB’s funding in years when the Fed is in deficit. The meaning under Dodd-Frank of the Federal Reserve System’s “earnings” (from which CFPB funding is supposed to come) in years when the Fed is operating at a deficit is something that may need to be resolved (and something on which I have little to observe, except that “earnings” is a term that, even if it refers to bottom rather than top lines, needn’t always have to be understood by reference to a particular year). But that (perhaps interesting and important) statutory question is distinct from any constitutional constraints, and Professor Scott, in his op-ed, explicitly puts the meaning of the statute to one side and focuses instead on what he sees as “the constitutional problem” that remains. With regard to the Constitution, although the ruling isn’t an all-purpose constitutional clean bill of health for the Bureau (no ruling ever purports to insulate any entity from attacks beyond those made in the case at hand), there is no sense in which the “CFPB’s dramatic victory may turn out to be a stunning defeat.” At worst, it might not turn out to be a victory that resolves all other possible attacks, but that is always true, and Professor Scott doesn’t even seek to sketch any plausible constitutional attacks that should or will ensue.

For Jannese Torres, a personal finance expert, podcast host and entrepreneur, life couldn’t be better. She’s living in her dream home in Tampa Bay, has passive income rolling in and just embarked on her first national tour to promote Financially Lit!, her personal finance book.

And to think a few short years ago, she was burnt out and miserable.

Less than five years ago, Torres was living in a house she hated, stuck in a toxic marriage, working a job she didn’t love and had thousands of dollars of student loan debt in her name. Torres felt like she did everything right, but she found herself disillusioned with the American Dream she’d been sold. 

It wasn’t until she turned her back on the milestones she felt she needed to achieve that she found true happiness.

“It’s never too late to make a change,” said Torres. “The first step is usually the hardest. Your only regret will be not doing it sooner.”

It can be terrifying to make big pivots in life — not to mention expensive. But staying in an unhappy situation can cost you even more. Torres knows this firsthand and wants to share the tips she wished she had when her “perfect life” was dragging her down.

Buying a home doesn’t always buy you happiness

When many of us approach our 30s, we begin measuring our achievements and successes against our peers’. This need for comparison combined with the pressure from our communities and society can lead us to make financial decisions that aren’t aligned with what we actually want in life, Torres said. 

When Torres turned 30, she found herself buying a home in a state of autopilot. She didn’t stop to ask herself if she even wanted to buy a home. She just knew she felt behind her peers and assumed that’s what she was supposed to do.

She wasn’t even sure if she was financially ready to be a homeowner. But fear of missing out and the idea that buying a house was the next logical step convinced her to take the plunge. 

“The pinnacle of success in my Puerto Rican family is to buy a home,” said Torres. “That’s how you know you’ve made it.”

After three years, she realized she was living somewhere she didn’t love, and sold the home for $10,000 less than what she bought it for. 

“It was not a great financial decision in the short term, but in the long term, it definitely set me up for success,” Torres said.

Having the courage to make a choice that contradicted what society had led her to believe she should do changed her life. “Getting rid of my home was the single largest factor in me being able to pursue financial independence,” said Torres. 

Torres traded in her $3,500 monthly mortgage in New Jersey for her dream rental in the Tampa Bay area for $1,600 a month. Six years later, Torres still rents and isn’t in a hurry to buy a home. She pays more than she did in 2018, but for her, it’s worth it. She enjoys the year-round nice weather and no state income tax — which is a benefit to being a self-employed high-income earner, she added. 

Don’t get married without protecting your money

As much as we want some life decisions to work out, they don’t always. No one enters into a marriage expecting a divorce, but that’s how many marriages end. Maintaining separate bank accounts and creating a postnuptial agreement allowed Torres to get out of her marriage financially unscathed. But it could have been much harder if she hadn’t planned ahead. 

Combining finances can make sense for shared bills, but Torres recommends always having your own money set aside. It’s sage advice for anyone moving in with a partner or contemplating marriage. 

“One of the advantages that I had, especially in the process of getting divorced was I always kept my finances separate.”

If you don’t love your career, it’s not too late to change paths

Torres spent $55,000 in student loans to get a bachelor’s degree in molecular biology and a master’s In biotechnology only to end up in a 9-to-5 corporate job that was draining her. She was making a decent salary. But the student loan debt and unfulfilling career had her questioning her choices.

At 36, she decided to go into business for herself — a big shift, but one she felt she had to try. 

She didn’t jump ship from her full-time job until she had her new business set up correctly. She took her time to build up a bigger emergency fund — just in case — and looked into retirement and healthcare plans to make sure she was protected when she left her job. She also made sure to set up her business as an S-corporation so she could pay herself regular paychecks, while setting aside enough money for business costs and taxes. 

And she has no regrets. “Taking the extra time to make sure that those things were in place made me feel like I built something that’s sustainable versus something for the short term,” said Torres. 

Now she’s her own boss, creates her own schedule and is doing work that’s rewarding. Some days, she’s coaching clients or building a new course. Other days it’s recording podcast episodes or creating social media content. And when she needs a break, she loves that she has the freedom to book an impromptu trip. 

“The most rewarding thing is being able to pour into my relationships and prioritize my happiness and health because money is no longer a factor that controls my life,” said Torres.

Life’s too short to settle

Although Torres encourages her followers to get out of unhappy situations as soon as they can, she also stresses taking the time you need to prepare. Planning to leave a marriage or start a small business may require saving money for several months. 

Make moves in the meantime to better yourself, she said. For example, if you want to change roles at your job, think about how you can pivot without having to pay a significant amount in school costs. Are there opportunities at your current workplace to mentor in a different department or shadow someone in a career you’re interested in? Maybe you can lean on free resources online, like a free or low-cost boot camp to earn a certification.

“That could put you on a path to making a pivot without you having to go and get a whole other degree,” she added.

It’s OK if you can’t make a change immediately, but don’t be complacent. Before you know it, five to 10 years will have passed and you may be in the same situation. 

You may never be 100% ready to take the plunge. But preparing as much as you can in advance can help you feel more secure, so you’re not tempted to idle in a situation that’s holding you back.

“The worst thing you can do is use money as the reason why you’re going to stay stuck in the situation,” said Torres.

Buy Now, Pay Later programs are effectively the same as credit cards, the Consumer Financial Protection Bureau said Wednesday.

In what it called an interpretive rule, the federal consumer watchdog agency said so-called BNPL lenders are obligated to offer refunds and allow users to dispute charges just like they can with traditional credit cards.

“When consumers check out and choose Buy Now, Pay Later, they don’t know if they will get a refund if they return their product or whether the lender will help them if they didn’t get what was promised,” Consumer Financial Protection Bureau Director Rohit Chopra said in a statement.

“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books.”

The CFPB said it has been investigating the BNPL industry for more than two years and often receives complaints about refunds and disputed transactions in such programs. About 13% of BNPL transactions involve a dispute or return, the agency said.

BNPL programs that let customers pay for products over time without paying interest have grown in recent years. A new Federal Reserve Economic Well-Being of U.S. Households report released this week said 14% of U.S. adults reported using Buy Now, Pay Later programs last year — a 2% increase compared with 2022.

Consumers’ top reasons for using BNPL were wanting to spread out payments (87%) and convenience (82%). More than half of BNPL users said it was the only way they could afford to buy what they did.

The CFPB said BNPL programs are advertised as a payment option at checkout, similar to credit cards. They work as digital accounts that link to a company’s web site or mobile app. Merchants are charged transaction fees, similar to credit cards.

The CFPB said BNPL programs fall under the purview of the Truth in Lending Act, requiring lenders to investigate disputes initiated by consumers and pause payments while they are investigated. The act also ensures lenders credit refunds to consumer accounts and provide billing statements.

“President Biden has encouraged his Administration to do everything possible to crack down on corporate rip-offs,” National Economic Council Deputy Director Jon Donenberg said in a statement about the rule. “The Consumer Financial Protection Bureau is answering that call by making sure Buy Now, Pay Later platforms abide by the law, including providing refunds when products are returned or not delivered.”

The interpretive rule comes less than a week after the Supreme Court preserved the current funding structure for the agency, which was established during the Obama administration to enforce federal protections for consumer financial products.