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The funding structure of the Consumer Financial Protection Bureau (CFPB) passes constitutional muster, the Supreme court ruled yesterday, rebuffing a challenge from payday lenders.

Why it matters: The CFPB was created in the wake of the 2008 financial crisis and plays a crucial role in regulating things like mortgages and car loans, protecting consumers from predatory practices by banks and other financial firms, Axios' Ivana Saric writes.

The big picture: In approving the CFPB's funding model, the Supreme Court reversed a lower court ruling and rejected a conservative-led challenge brought by payday lenders.

In the majority opinion, Justice Clarence Thomas wrote that the CFPB's model complies with the Constitution.

"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," Thomas wrote.

The court ruled 7–2, with Justices Samuel Alito and Neil Gorsuch dissenting.

Zoom out: Many consumer advocates and progressives were relieved by the ruling.

By upholding the CFPB's funding structure, the agency "stands to continue fighting to protect the American people from corporate bad actors, fraudsters and scammers," Devon Ombres, senior director for Courts and Legal Policy at the Center for American Progress, said in a statement.

Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending, also cheered the ruling as a "welcome dose of common sense."

The ruling "rejected an unprecedented, reckless argument that could have destabilized a housing market that undergirds our economy and invited challenges to funding for most of the federal government, including Medicare and the Federal Reserve," Chabrier said.

💭 Lucinda's thought bubble: This was the expected outcome. The other big thing to watch, though, is the Chevron deference, which is being challenged separately and could also weaken CFPB's power.

1. Challenge to CFPB's funding rejected

Consumer Financial Protection Bureau headquarters in Washington. Photo: Tierney L. Cross/Bloomberg via Getty Images

May 13 — Butter Payments raised $10 million at a $135 million valuation from Atomic and Norwest, it told Lucinda exclusively.

Why it matters: An estimated 8% of subscription payments result in involuntary churn, research based on internal data from Stripe in 2023 shows.

Go deeper: Read Monday's newsletter, plus Monday's Pro Rata on private equity's record amount of dry powder.

2. Fixing subscription payments

Illustration of pile of money with hovering cursor

May 14 — Chinese fintech Ant Group's quarterly earnings declined 19% year over year as it seeks to grow its international business following a domestic regulatory crackdown.

Why it matters: The company is betting on global partnerships to prepare for an eventual IPO, Ryan wrote.

Go deeper: Read Tuesday's newsletter, plus Tuesday's Pro Rata on a federal judge in Texas dismissing what could have been a landmark antitrust lawsuit.

3. Ant's earnings decline

Illustrations of ants marching in a downward trend line across a grid

May 15 — Haun Ventures founder Katie Haun, in a conversation with Dan Primack at the Axios BFD in San Francisco, confirmed that the firm had invested in late-stage crypto survivors Fireblocks and Chainalysis.

Why it matters: The investments, both previously unannounced, came while other crypto VCs either slowed investing or stopped altogether, Ryan wrote.

Go deeper: Read Wednesday's newsletter, plus Wednesday's Pro Rata on billionaire Frank McCourt assembling a "people's bid" to buy TikTok.

4. Why Katie Haun invested in Fireblocks and Chainalysis

Katie Haun on stage at Axios BFD. Photo: Chris Constantine on behalf of Axios

Katie Haun onstage at Axios BFD. Photo: Chris Constantine on behalf of Axios

May 15 — Cover Genius, which embeds insurance into businesses, has raised an $80 million Series E led by Spark Capital, Lucinda learned exclusively.

Why it matters: The raise comes as the expansion of e-commerce and the sharing economy have created a need for new kinds of insurance products.

5. Cover Genius nabs $80M

Illustration of cursors cracking a shield.

May 16 — Blackstone agreed to acquire a majority stake in Israeli enterprise resource planning firm Priority Software, Ryan wrote.

Why it matters: Bloomberg reported that the deal values Priority Software at $800 million, making it Blackstone's largest investment in Israel since opening an office there three years ago.

Go deeper: Read Thursday's newsletter, plus Thursday's Pro Rata on Aflac (NYSE: AFL) agreeing to buy a roughly 40% stake in private credit firm Tree Line Capital Partners.

6. Blackstone's big ERP bet

Illustration of a conference table with a hundred dollar bill on it

Happy Friday, Fintech readers. Research associate Natalie Breymeyer here with your weekly digest.

🦌 Natalie is grateful for the few glimpses she's caught of a fawn and its mom in her yard over the last week. 

Thanks to George Moriarty and Brad Bonhall for today's edits.

And thanks to you for reading. Please tell your fintech friends about this newsletter. They can sign up here.

May 17, 2024

1. Challenge to CFPB's funding rejected