Community Financial Services Association of America and Consumer Service Alliance of Texas (the “Plaintiffs”) challenge the validity of the Consumer Financial Protection Bureau’s 2017 Payday Lending Rule. The Plaintiffs contend that in promulgating that rule, the Bureau acted arbitrarily and capriciously and exceeded its statutory authority. They also contend that the Bureau is unconstitutionally structured, challenging the Bureau Director’s insulation from removal, Congress’s broad delegation of authority
to the Bureau, and the Bureau’s unique, double-insulated funding mechanism. The district court rejected these arguments.

We agree that, for the most part, the Plaintiffs’ claims miss their mark. But one arrow has found its target: Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation ofpowers. We thus reverse the judgment of the district court, render judgment in favor of the Plaintiffs, and vacate the Bureau’s 2017 Payday Lending Rule. …

Drawing on the British experience, the Framers “carefully separate[d] the ‘purse’ from the ‘sword’ by assigning to Congress and Congress alone the power of the purse.” Tex. Educ. Agency v. U.S. Dep’t of Educ., 992 F.3d 350, 362 (5th Cir. 2021). 8 The Framers’ reasoning was twofold. First, they viewed Congress’s exclusive “power over the purse” as an indispensable check on “the overgrown prerogatives of the other branches of the government.” The Federalist No. 58 (J. Madison). Indeed, “the separation of purse and sword was the Federalists’ strongest rejoinder to Anti-Federalist fears of a tyrannical president.” Josh Chafetz, Congress’s Constitution, Legislative Authority and the Separation of Powers 57 (2017).

[Keep this point bookmarked for when Biden’s student-loan bailout comes before the Fifth Circuit. — Ed]