The 2020 fiscal year federal budget proposed by the Trump Administration earlier this month would alter the funding structure of the Consumer Financial Protection Bureau. The budget, found here, would bring the bureau under the typical Congressional appropriations process. Both the 2019 and 2018 proposed budgets had similar language that was eventually dropped.
Under the Dodd-Frank Act, the Federal Reserve is required to transfer to the CFPB on a quarterly basis “the amount determined by the director to be reasonably necessary to carry out the authorities of the bureau under Federal consumer financial law, taking into account such other sums made available to the bureau from the preceding year (or quarter of such year.)”
The 2020 budget as submitted contains a line item designated “Restructure the Consumer Financial Protection Bureau” that shows a $23 million reduction in funding. An accompanying document entitled “2020 Major Savings and Reforms” states that the proposed budget would “cap transfers by the Federal Reserve Board to the CFPB during 2020 to $485 million, equivalent to the 2015 level.” This would be followed by a $508 million funding reduction in FY 2021 and increasing funding reductions each year up to a $607 million reduction in FY 2029. The reductions are based on the estimated funding that would be available to the CFPB from the Fed under current law. Over the ten-year period, total funding reductions are projected to be about $5 billion.
This restructure would “limit its mandatory funding in 2020, and provide discretionary appropriations beginning in 2021.” This aspect of the budget would require legislative action to amend Dodd-Frank. During former director Richard Cordray’s tenure, numerous bills were introduced by Republicans seeking the same outcome, and the funding structure was again a target of criticism when current CFPB Director Kathy Kraninger recently appeared before the House Financial Services Committee.
The appropriations bill signed into law by President Trump in February that ended the partial government shutdown includes a provision dealing with CFPB funding requests. It provides that during 2019, when the CFPB director requests a funds transfer from the Federal Reserve, the CFPB “shall notify the Committees on Appropriations of the House of Representatives and the Senate, the Committee on Financial Services of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate of such request.” Such notification must also be posted on the CFPB’s website.