A District Court judge in Nevada has stayed an investigation by the Consumer Financial Protection Bureau into the a short-term small-dollar lender until the Supreme Court issues its ruling on whether the funding structure for the Bureau is constitutional or not.
The Background: The CFPB issued a Civil Investigative Demand to Check City in late 2022 as part of an investigation into the company’s lending practices. Check City complied with the CID until this past March, when it asked the Bureau to stay the proceedings after the Supreme Court agreed to hear arguments in Community Financial Services Association and Consumer Service Alliance of Texas v. Consumer Financial Protection Bureau, which challenged that the way in which the Bureau is funded — through money given to it by the Federal Reserve Board instead of through the congressional appropriations process like most federal agencies — is unconstitutional.
- But the Bureau instead petitioned a federal judge to order Check City to comply with the CID, arguing that it could be a year until the Supreme Court issues its ruling.
The Ruling: A stay is not indefinite, noted Judge James C. Mahan of the District Court for the District of Nevada, adding that other courts have reached similar decisions.
The Last Word: “A brief stay to avoid conducting wasteful and unrecoverable investigation efforts and enforcement proceedings on a matter that may be dismissed pending the Supreme Court’s decision is justified,” Judge Mahan wrote.
