Bill introduced to alter CFPB funding structure

Sen. David Perdue (R-Ga.) has introduced a bill in the Senate that would alter the current funding structure of the CFPB by bringing it under the typical Congressional appropriations process.

Sen. David Perdue (R-Ga.) has introduced a bill in the Senate that would alter the current funding structure of the CFPB by bringing it under the typical Congressional appropriations process.

The bill, co-sponsored by 17 Republican senators, is identical to two previous bills introduced by Perdue, a member of the Senate Banking Committee, in 2015 and 2016. Those bills, however, were introduced under the previous CFPB director, Obama appointee Richard Cordray.

The Dodd-Frank Act of 2010 created a unique funding structure for the CFPB. Unlike other executive agencies that are funded by appropriations, the bureau was designed to draw funding from the Federal Reserve and from penalties paid by regulated entities subject to enforcement actions. Dodd-Frank establishes the CFPB’s budget at as much as 12 percent of the Federal Reserve’s annual operating expense, which is funded traditionally.

Perdue noted that 12 percent of the most recent Federal Reserve budget would be roughly $680 million. With no way to directly limit its spending, the CFPB operates without sufficient checks from Congress, Perdue argued.

“Dodd-Frank gave the CFPB unprecedented power with no Congressional oversight,” he wrote in a press release. “Despite the new director’s efforts to bring transparency to the bureau, its structure is still completely unconstitutional. The American people deserve a closer look at the CFPB to understand how its actions will impact consumers.”

The bill, known as the “Consumer Financial Protection Bureau Accountability Act of 2019,” would amend Section 1027 of Dodd-Frank to remove mention of the Federal Reserve. In addition, the test under the heading “Authorization of Appropriations” would be amended to read “There is authorized to be apportioned such funds as may be necessary” for the bureau to carry out its duties.

The bill has been introduced while the bureau’s funding structure remains embroiled in various legal proceedings. PHH challenged the bureau’s constitutionality partially in funding grounds last year, though the structure was found constitutional by the federal court of appeals.

State National Bank of Big Spring had also questioned the constitutionality of shielding the bureau from the appropriations process. Last September, another federal court of appeals ruled in the bureau’s favor and the Supreme Court refused to hear an appeal.

However, another case, CFPB v. RD Legal Funding, has been brewing in New York where a district court found that the bureau’s funding structure was unconstitutional. The CFPB has appealed that decision.