RSSOn a 28-21 vote, the House Financial Services Committee passed the Consumer Financial Protection Accountability and Reform Act in mid-September. The reform package envisions large-scale changes for the CFPB.
Core to the bill is a change in the funding approach for the bureau, shifting CFPB into the regular congressional appropriations process and ending its direct funding from the Federal Reserve.
The shift is in line with recommendations made over the summer by the CFPB’s Acting Director Russell Vought who, in July testimony before the committee, outlined his support for overhauling CFPB’s standalone funding. Mark Paoletta, who served as the bureau’s deputy director and chief legal officer under Vought, took over as acting director on Aug. 1, pending Senate approval of President Trump’s nominee for next director, Brian Johnson. Paoletta supports the shift to congressional funding.
Other changes include:
- Removing the CFPB’s ability to carry unused balances from the Consumer Financial Protection Fund from year to year.
- Establishing a standalone inspector general for CFPB, “separate from the Inspector General of the Board of Governors of the Federal Reserve System.”
- Enhancing cost-benefit analyses of rules and their effects with a requirement for CFPB to amend or repeal rules that “do not demonstrate net benefits.”
- Clarifying standards for Unfair, Deceptive, or Abusive Acts or Practices (UDAAP), in particular raising the bar for “abusive” by requiring stricter evidence of intent and injury.
Higher thresholds for supervision and complaints
If passed, the legislation would raise the asset threshold for banks and credit unions that are subject to CFPB supervision from $10 billion to $30 billion, indexed for future growth. Traditional bank regulators would have exclusive enforcement authority for banks under $30 billion, “though the CFPB is still permitted to refer enforcement actions and require limited reports under existing authorities.”
It would also raise the bar on complaints against financial institutions, requiring consumers to swear to the accuracy and legitimacy of their complaints and to submit complaints directly to their banks before sending them to the CFPB complaint portal. Building on CFPB’s August decision to stop publishing unverified complaint narratives, the bill would protect “complaint narrative confidentiality while permitting publication of aggregated, non-identifiable data.”
As reform discussions play out, CFPB activity is comparatively light. After returning to office in 2025, the Trump administration cut the bureau’s budget significantly. Under Vought’s watch, the CFPB paused nearly all enforcement work.
