House Republicans are advancing a proposal to significantly reduce the funding of the Consumer Financial Protection Bureau. Under the proposal, the agency’s annual funding would be slashed by 70%, from its current cap of $823 million to just $249 million, according to a published report. This dramatic cut could undermine the CFPB’s ability to effectively oversee financial services companies and protect consumers from predatory practices. The proposed measure is set for a markup hearing before the House Financial Services Committee today.
The specifics:
- The new GOP proposal is part of a broader tax and budget bill and would lower the CFPB’s funding cap from 12% of the Federal Reserve’s 2009 revenue to just 5%.
- This change, if passed, would also reduce the CFPB’s ability to carry out its duties, which include policing large banks and mortgage lenders.
- The bill could result in the Bureau being left with minimal resources, despite the CFPB’s requests for significantly less than its current cap.
Why this matters: Critics, including former CFPB official Julie Margetta Morgan, argue that the cuts could effectively shut down the agency, leaving it without the capacity to supervise financial companies and enforce consumer protection laws. The bill would also redirect fines collected from financial fraud cases to the Treasury, rather than allowing the CFPB to use the funds to compensate victims of bankrupt companies.
What’s next?: The House Financial Services Committee is scheduled to be addressed during a markup hearing today, and if passed, this would represent a significant shift in how the CFPB is funded and operates. Supporters of the bill claim it would make the CFPB more efficient, while opponents argue it risks increasing consumer vulnerabilities and making it easier for financial wrongdoers to operate unchecked.
