Congress Passes and President Signs Bill Slashing CFPB Budget
Last week, Congress passed and President Trump signed the “Big, Beautiful Bill,” the tax and budget package that the legislative branch has been debating for months. One provision of the bill cuts funding for the Consumer Financial Protection Bureau (CFPB) nearly in half, as it lowers the maximum amount of money the agency can request from the Federal Reserve, which provides the CFPB’s funding. The legislation narrowly passed in the Senate and the House, with a 51 to 50 vote in the former after Vice President J.D. Vance cast a tiebreaking vote, and a 218-214 vote in the latter.
“For the first time since the passage of Dodd-Frank, Congress is reining in the unaccountable Consumer Financial Protection Bureau and decreasing its mandatory funding cap by 46 percent, which will save over $2 billion and require the Bureau to be fiscally responsible,” said Senate Banking Committee Chairman Tim Scott (R-S.C.) in a press release.
American Banker noted that under the legislation, the CFPB can receive 6.5 percent of the Fed’s operating budget, down from 12 percent previously. Lawmakers will likely utilize this control over the Bureau in the future, both Republicans and Democrats, by raising and lowering the budget limitations.
The Senate Banking Committee initially proposed to zero out that funding source for the CFPB after the House Financial Services Committee originally limited the agency’s draw to 5 percent, but the Senate parliamentarian ruled out those options under the reconciliation rules, but allowed the 46 percent cut seen in the final legislation.
According to Politico, Democrats are already planning to weaponize the budget cut as part of their broad messaging of the bill. Republicans blocked an amendment from Senator Elizabeth Warren (D-Mass.) that would remove the CFPB language from the bill and require lawmakers to go on the record about that issue specifically.
“When this financial cop can’t do its job, there’s no one else in the entire federal government to pick up the slack,” said Warren on the Senate floor.
