The Supreme Court ruled Thursday that the funding framework for the Consumer Financial Protection Bureau is proper, delivering a blow to conservatives who have sought for years to do away with the agency.

The CFPB was the brainchild of Sen. Elizabeth Warren, Massachusetts Democrat, who envisioned the agency to be a Wall Street cop. 

Congress, when it created the CFPB in 2010, let the agency go straight to the Federal Reserve for funding rather than through annual appropriations from Congress, as most other agencies do.

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Critics argued that the structure ran afoul of the Constitution. But in a 7-2 decision, the high court said it was permissible.

“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,” wrote Justice Clarence Thomas for the majority.

Justice Samuel A. Alito Jr. and Justice Neil M. Gorsuch disagreed with the majority, noting in a dissent authored by Justice Alito that the CFPB could bankroll its own agenda without oversight from Congress. 

“In short, there is apparently nothing wrong with a law that empowers the executive to draw as much money as it wants from any identified source for any permissible purpose until the end of time. That is not what the Appropriations Clause was understood to mean when it was adopted,” read the dissent.

The Community Financial Services Association of America and the Consumer Service Alliance of Texas, both of which brought the challenge, had argued empowering the CFPB to set its budget undercuts the political accountability the Constitution requires.

The groups were specifically challenging the CFPB Payday Lending Rule, which restricted lenders’ ability to provide consumers with overly burdensome loans and restricted lenders’ access to borrowers’ accounts to demand repayment.

The 5th U.S. Circuit Court of Appeals last year ruled against the CFPB, reasoning that Congress illegally surrendered its power to appropriate funds.

The court said the payday rule must be vacated because it can be traced back to the CFPB‘s unconstitutional funding structure.

Other federal appeals courts have upheld the CFPB‘s arrangement. Those courts noted that other federal agencies, such as the Federal Reserve and the Federal Housing Finance Agency, also have budget autonomy.

The circuit split, which generally invites the justices to weigh in, was settled with Thursday’s opinion, which reverses the 5th Circuit’s ruling against the CFPB.

Ms. Warren pushed the idea of an independent Wall Street regulator when she was a Harvard University law professor. The idea gained traction during the 2008 Wall Street turmoil and was enshrined in the Dodd-Frank legislation that Democrats powered through Congress and to President Obama’s desk two years later.

A year later, Ms. Warren said independent funding was critical to making the CFPB “insulated from the political process.”

“Not one other banking regulator — not one — is subject to the yearly appropriations process,” she said. “The real-world risk of breaking from this historical practice is that the consumer agency could be forced to kowtow in the face of powerful banking opposition — in other words, to become less accountable to the American people.”

Ms. Warren had figured to be the CFPB‘s first director, but the Senate struggled to confirm her. She instead mounted a Democratic bid for the Senate and won in 2012.

The Biden administration channeled Ms. Warren in legal arguments, telling the justices that trying to protect financial regulators from political meddling is nothing unusual.

The last time the high court tackled the CFPB was in 2020, when the majority ruled that having a single director protected from a presidential firing was unconstitutional.

Chief Justice John G. Roberts Jr., writing that majority opinion, said the director had to be treated as an at-will position like most other executive branch posts.