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Supreme Court rejects payday lenders' challenge to Obama-era consumer protection bureau

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Supreme Court rejects payday lenders' challenge to Obama-era consumer protection bureau

The Supreme Court on Thursday upheld the U.S. consumer protection agency that was created under President Obama and congressional Democrats to protect Americans from financial scams.

By a 7-2 vote, the justices rejected a constitutional claim brought by a coalition of payday lenders who had won before a panel of three Trump appointees on the 5th Circuit Court of Appeals.

The lower court had questioned the legality of the agency, ruling it was not properly “accountable to Congress” because it did not receive its funding through an annual appropriation.

Writing for the majority, Justice Clarence Thomas said early American history shows that Congress could fund the government through different means, not just through an annual appropriation.

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“Based on the Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification, we conclude that appropriations need only identify a source of public funds and authorize the expenditure of those funds for designated purposes to satisfy the appropriations clause,” he wrote in CFPB vs. Consumer Financial Services Association.

Justices Samuel A. Alito Jr. and Neil M. Gorsuch dissented.

Alito faulted the court for upholding “a novel statutory scheme under which the powerful CFPB may bankroll its own agenda without any congressional control or oversight.”

Consumer advocates welcomed the decision.

“This ruling upholds the independent funding structure that has made the CFPB a successful advocate for protecting consumers and holding big banks, payday lenders, and other financial institutions accountable,” said Devon Ombres, a legal policy director for the Center for American Progress. A ruling upholding the 5th Circuit Court “could have placed the entire financial regulatory system at risk and roiled financial markets.”

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“Predatory lenders and companies that rip consumers off with illegal junk fees have been trying to undermine the CFPB since it was created,” said Lauren Saunders, associate director of the National Consumer Law Center.

In creating the new bureau, Congress decided to fund it with lending fees from the Federal Reserve. If the Supreme Court had ruled such funding was unconstitutional, its decision would have cast doubt on the Federal Reserve as well.

In defense of the bureau, Biden administration attorneys argued that throughout American history, Congress has created agencies and bureaus such as the Post Office, the National Mint, the Customs Bureau and the Patent Office which were funded by fees, not an annual appropriation from Congress.

The CFPB called the decision “a resounding victory for American families and honest businesses alike, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent, and competitive…For years, lawbreaking companies and Wall Street lobbyists have been scheming to defund essential consumer protection enforcement.”

Its statement said that since bureau opened its doors in 2011, “it has delivered more than $20 billion in consumer relief to hundreds of millions of consumers and has handled more than 4 million consumer complaints.”

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Thursday’s decision is the latest sign that the Supreme Court’s conservatives are not ready to rubber stamp far-right rulings from Trump-appointed judges in Texas and Louisiana.

On Wednesday, the justices set aside a decision by two Trump appointees in Louisiana which would have blocked the use of new state election map with two majority Black districts.

Still pending before the court is a conservative challenge to the availability of abortion medication. Since 2000, the Food and Drug Administration has said these pills are safe and effective for ending early pregnancies. But anti-abortion doctors went to Texas and won rulings that could strictly limit dispensing the pills.

The consumer protection bureau that was upheld Thursday was conceived by Sen. Elizabeth Warren (D-Mass.) when she was a law professor.

The bureau became the centerpiece of the 2010 Dodd-Frank overhaul of financial regulations following the collapse of the mortgage market.

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Its mission was to protect borrowers and consumers from deceptive and unfair practices by banks and mortgage lenders.

But it has been steadily opposed by much of the lending industry and by many Republicans who say the agency has too much unchecked power.

Congressional Democrats who created the bureau tried to shield it from the politics of Washington but that led to problems in the courts.

Under the 2010 legislation, the bureau’s director could not be removed by the president for political reasons, and the bureau’s budget was off-limits to Congress’ annual process of appropriations. Instead, its funding comes from the Federal Reserve, which earns fees from lending. The bureau used $641 million of that money last year.

The Supreme Court’s conservatives had cast a skeptical eye on the bureau. Four years ago, the justices in a 5-4 decision rejected the independent status of the director and ruled that person could be removed by the president for any reason, including political differences.

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The current dispute began as a challenge to a proposed regulation of payday lenders.

In ruling for the lenders, the three judges of the 5th Circuit, all appointees of President Trump, said it violated the Constitution to shield the bureau from an annual fight over its appropriation.

Judge Cory Wilson said the “bureau’s perpetual insulation from Congress’ appropriations power, including the express exemption from congressional review of its funding, renders it … no longer accountable to Congress and, ultimately, to the people.”

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San Diego sues to stop border barrier construction

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San Diego sues to stop border barrier construction

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The city of San Diego sued the federal government to stop the construction of razor wire fencing on city-owned land near the U.S.-Mexico border, accusing federal agencies of trespassing and causing environmental damage.

The city filed the complaint in the U.S. District Court for Southern California on Monday. The complaint named Department of Homeland Security Secretary Kristi Noem and Secretary of War Pete Hegseth among the defendants.

The city accused the federal government of acting without legal authority when they entered city property in Marron Valley and began installing razor wire fencing.

“The City of San Diego will not allow federal agencies to disregard the law and damage City property,” said City Attorney Heather Ferbert in a news release. She said the lawsuit aims to protect sensitive habitats and ensure environmental commitments are upheld.

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San Diego is suing the federal government to stop the construction of razor wire fencing on city property in Marron Valley. (Justin Hamel/Bloomberg via Getty Images, File)

According to the lawsuit, federal personnel including U.S. Marines accessed the land without the city’s consent, and damaged environmentally sensitive areas protected under long-standing conservation agreements.

DHS Secretary Kristi Noem and Secretary of War Pete Hegseth were among the federal officials named in San Diego’s lawsuit. (Reuters/Brian Snyder; AP Photo/Alex Brandon)

San Diego argues the fencing has blocked the city’s ability to manage and assess its own property and could jeopardize compliance with environmental obligations.

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An American flag can be seen through the barbed wire surrounding the CoreCivic Otay Mesa Detention Center on October 4, 2025 in San Diego, California. (Kevin Carter/Getty Images)

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The lawsuit also accuses the federal government of trespassing and beginning construction without proper authority or environmental review, and unconstitutionally taking the land in violation of the Fifth Amendment.

Fox News Digital reached out to DHS and the Pentagon for comment.

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Commentary: Tim Walz isn’t the only governor plagued by fraud. Newsom may be targeted next

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Commentary: Tim Walz isn’t the only governor plagued by fraud. Newsom may be targeted next

Former vice presidential contender and current aw-shucks Minnesota Gov. Tim Walz announced this week that he won’t run for a third term, dogged by a scandal over child care funds that may or may not be going to fraudsters.

It’s a politically driven mess that not coincidentally focuses on a Black immigrant community, tying the real problem of scammers stealing government funds to the growing MAGA frenzy around an imaginary version of America that thrives on whiteness and Christianity.

Despite the ugliness of current racial politics in America, the fraud remains real, and not just in Minnesota. California has lost billions to cheats in the last few years, leaving our own governor, who also harbors D.C. dreams, vulnerable to the same sort of attack that has taken down Walz.

As we edge closer to the 2028 presidential election, Republicans and Democrats alike will probably come at Gavin Newsom with critiques of the state’s handling of COVID-19 funds, unemployment insurance and community college financial aid to name a few of the honeypots that have been successfully swiped by thieves during his tenure.

In fact, President Trump said as much on his social media barf-fest this week.

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“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun,” he wrote.

Right-wing commentator Benny Johnson also said he’s conducting his own “investigation.” And Republican gubernatorial candidate Steve Hilton is claiming his fraud tip line has turned up “(c)orruption, fraud and abuse on an epic scale.”

Just to bring home that this vulnerability is serious and bipartisan, Rep. Ro Khanna, the Silicon Valley congressman rumored to have his own interest in the Oval Office, is also circling the fraud feast like a vulture eyeing his next meal.

“I want to hear from residents in my district and across the state about waste, mismanagement, inefficiencies, or fraud that we must tackle,” Khanna wrote on social media.

Newsom’s spokesman Izzy Gardon questioned the validity of many fraud claims.

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“In the actual world where adults govern,” Gardon said, “Gavin Newsom has been cleaning house. Since taking office, he’s blocked over $125 BILLION in fraud, arrested criminal parasites leaching off of taxpayers, and protected taxpayers from the exact kind of scam artists Trump celebrates, excuses, and pardons.”

What exactly are we talking about here? Well, it’s a pick-your-scandal type of thing. Even before the federal government dumped billions in aid into the states during the pandemic, California’s unemployment system was plagued by inefficiencies and yes, scammers. But when the world shut down and folks needed that government cash to survive, malfeasance skyrocketed.

Every thief with a half-baked plan — including CEOs, prisoners behind bars and overseas organized crime rackets — came for California’s cash, and seemingly got it. The sad part is these weren’t criminal geniuses. More often than not, they were low-level swindlers looking at a system full of holes because it was trying to do too much too fast.

In a matter of months, billions had been siphoned away. A state audit in 2021 found that at least $10 billion had been paid out on suspicious unemployment claims — never mind small business loans or other types of aid. An investigation by CalMatters in 2023 suggested the final figure may be up to triple that amount for unemployment. In truth, no one knows exactly how much was stolen — in California, or across the country.

It hasn’t entirely stopped. California is still paying out fraudulent unemployment claims at too high a rate, totaling up to $1.5 billion over the last few years — more than $500 million in 2024 alone, according to the state auditor.

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But that’s not all. Enterprising thieves looked elsewhere when COVID-19 money largely dried up. Recently, that has been our community colleges, where millions in federal student aid has been lost to grifters who use bots to sign up for classes, receive government money to help with school, then disappear. Another CalMatters investigation using data obtained from a public records request found that up to 34% of community college applications in 2024 may have been false — though that number represents fraudulent admissions that were flagged and blocked, Gardon points out.

Still, community college fraud will probably be a bigger issue for Newsom because it’s fresher, and can be tied (albeit disingenuously) to immigrants and progressive policies.

California allows undocumented residents to enroll in community colleges, and it made those classes free — two terrific policies that have been exploited by the unscrupulous. For a while, community colleges didn’t do enough to ensure that students were real people, because they didn’t require enough proof of identity. This was in part to accommodate vulnerable students such as foster kids, homeless people and undocumented folks who lacked papers.

With no up-front costs for attempting to enroll, phonies threw thousands of identities at the system’s 116 schools, which were technologically unprepared for the assaults. These “ghost” students were often accepted and given grants and loans.

My former colleague Kaitlyn Huamani reported that in 2024, scammers stole roughly $8.4 million in federal financial aid and more than $2.7 million in state aid from our community colleges. That‘s a pittance compared with the tens of billions that was handed out in state and federal financial aid, but more than enough for a political fiasco.

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As Walz would probably explain if nuanced policy conversations were still a thing, it’s both a fair and unfair criticism to blame these robberies on a governor alone — state government should be careful of its cash and aggressive in protecting it, and the buck stops with the governor, but crises and technology have collided to create opportunities for swindlers that frankly few governmental leaders, from the feds on down, have handled with any skill or luck.

The crooks have simply been smarter and faster than the rest of us to capitalize first on the pandemic, then on evolving technology including AI that makes scamming easier and scalable to levels our institutions were unprepared to handle.

Since being so roundly fleeced during the pandemic, multiple state and federal agencies have taken steps in combating fraud — including community colleges using their own AI tools to stop fake students before they get in.

And the state is holding thieves accountable. Newsom hired a former Trump-appointed federal prosecutor, McGregor Scott, to go after scam artists on unemployment. And other county, state and federal prosecutors have also dedicated resources to clawing back some of the lost money.

With the slow pace of our courts (burdened by their own aging technology), many of those cases are still ongoing or just winding up. For example, 24 L.A. County employees were charged in recent months with allegedly stealing more than $740,000 in unemployment benefits, which really is chump change in this whole mess.

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Another California man recently pleaded guilty to allegedly cheating his way into $15.9 million in federal loans through the Paycheck Protection Program and Economic Injury Disaster Loan programs.

And in one of the most colorful schemes, four Californians with nicknames including “Red boy” and “Scooby” allegedly ran a scam that boosted nearly $250 million in federal tax refunds before three of them attempted to murder the fourth to keep him from ratting them out to the feds.

There are literally hundreds of cases across the country of pandemic fraud. And these schemes are just the tip of the cash-berg. Fraudsters are also targeting fire relief funds, food benefits — really, any pot of public money is fair game to them. And the truth is, the majority of that stolen money is gone for good.

So it’s hard to hear the numbers and not be shocked and angry, especially as the Golden State is faced with a budget shortfall that may be as much as $18 billion.

Whether you blame Newsom personally or not for all this fraud, it’s hard to be forgiving of so much public money being handed to scoundrels when our schools are in need, our healthcare in jeopardy and our bills on an upward trajectory.

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The failure is going to stick to somebody, and it doesn’t take a criminal mastermind to figure out who it’s going to be.

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Wyoming Supreme Court rules laws restricting abortion violate state constitution

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Wyoming Supreme Court rules laws restricting abortion violate state constitution

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The Wyoming Supreme Court ruled on Tuesday that a pair of laws restricting abortion access violate the state constitution, including the country’s first explicit ban on abortion pills.

The court, in a 4-1 ruling, sided with the state’s only abortion clinic and others who had sued over the abortion bans passed since the U.S. Supreme Court overturned Roe v. Wade in 2022, which returned the power to make laws on abortion back to the states.

Despite Wyoming being one of the most conservative states, the ruling handed down by justices who were all appointed by Republican governors upheld every previous lower court ruling that the abortion bans violated the state constitution.

Wellspring Health Access in Casper, the abortion access advocacy group Chelsea’s Fund and four women, including two obstetricians, argued that the laws violated a state constitutional amendment affirming that competent adults have the right to make their own health care decisions.

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The Wyoming Supreme Court ruled that a pair of laws restricting abortion access violate the state constitution. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

Voters approved the constitutional amendment in 2012 in response to the federal Affordable Care Act, which is also known as Obamacare.

The justices in Wyoming found that the amendment was not written to apply to abortion but noted that it is not their job to “add words” to the state constitution.

“But lawmakers could ask Wyoming voters to consider a constitutional amendment that would more clearly address this issue,” the justices wrote.

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Wellspring Health Access President Julie Burkhart said in a statement that the ruling upholds abortion as “essential health care” that should not be met with government interference.

“Our clinic will remain open and ready to provide compassionate reproductive health care, including abortions, and our patients in Wyoming will be able to obtain this care without having to travel out of state,” Burkhart said.

Wellspring Health Access opened as the only clinic in the state to offer surgical abortions in 2023, a year after a firebombing stopped construction and delayed its opening. A woman is serving a five-year prison sentence after she admitted to breaking in and lighting gasoline that she poured over the clinic floors.

Wellspring Health Access opened as the only clinic in the state to offer surgical abortions in 2023, a year after a firebombing stopped construction. (AP)

Attorneys representing the state had argued that abortion cannot violate the Wyoming constitution because it is not a form of health care.

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Republican Gov. Mark Gordon expressed disappointment in the ruling and called on state lawmakers meeting later this winter to pass a constitutional amendment prohibiting abortion that residents could vote on this fall.

An amendment like that would require a two-thirds vote to be introduced as a nonbudget matter in the monthlong legislative session that will primarily address the state budget, although it would have significant support in the Republican-dominated legislature.

“This ruling may settle, for now, a legal question, but it does not settle the moral one, nor does it reflect where many Wyoming citizens stand, including myself. It is time for this issue to go before the people for a vote,” Gordon said in a statement.

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Gov. Mark Gordon expressed disappointment in the ruling. (Getty Images)

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One of the laws overturned by the state’s high court attempted to ban abortion, but with exceptions in cases where it is needed to protect a pregnant woman’s life or in cases of rape or incest. The other law would have made Wyoming the only state to explicitly ban abortion pills, although other states have implemented de facto bans on abortion medication by broadly restricting abortion.

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Abortion has remained legal in the state since Teton County District Judge Melissa Owens blocked the bans while the lawsuit challenging the restrictions moved forward. Owens struck down the laws as unconstitutional in 2024.

Last year, Wyoming passed additional laws requiring abortion clinics to be licensed surgical centers and women to receive ultrasounds before having medication abortions. A judge in a separate lawsuit blocked those laws from taking effect while that case moves forward.

The Associated Press contributed to this report.

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