Spending bill forces consumer bureau to notify committees of funding transfer requests from Federal Reserve

Also includes funding for FDIC OIG, NCUA community development fund

The consumer financial protection agency is required to give a heads-up to select congressional committees when making a request for transfer of funds from the Federal Reserve under legislation signed by the president late last week funding the government through the end of the fiscal year.

Under section 746, Title VII of Division D (Financial Services and General Government Appropriations) of House Joint Resolution 31 (the Consolidated Appropriations Act, 2019) the Consumer Financial Protection Bureau (CFPB) must notify the Senate and House Appropriations Committees and the Senate Banking and House Financial Services Committees.

The bureau is also required, under the new law, to make the notices to the committees available on its public website.

In separate areas, the new law also provides some funding for both the Federal Deposit Insurance Corp. (FDIC) – just under $43 million to fund the agency’s Office of Inspector General (OIG) – and for the National Credit Union Administration’s (NCUA) Community Development Revolving Loan Fund program ($2 million available until Sept. 30, 2020, for technical assistance to low-income-designated credit unions).

Regarding CFPB, the legislation, signed by President Donald Trump Feb. 15, alters slightly the funding notification process for the bureau. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), the agency’s operations are funded by the Federal Reserve through a transfer of funds from the central bank to cover the consumer bureau’s annual expenses. According to Dodd-Frank, the amount transferred relies on a determination by the CFPB director of what is “reasonably necessary” to carry out the authorities of the bureau under federal consumer law.

The only real limit is that the amount transferred cannot exceed 12% of the expenses of the Federal Reserve System.

The slight change brought by H.J. Res. 31 provides first-ever congressional oversight of the agency’s funding process. Dodd-Frank provides that funds derived from the Federal Reserve for transfer to the bureau “shall not be subject to review by the Committees on Appropriations of the House of Representatives and the Senate.”

In January 2018, then-Acting Director John (“Mick”) Mulvaney raised some eyebrows when he requested $0 from the Federal Reserve to cover the bureau’s operations for the second quarter of fiscal year (FY) 2018.

“The reason for this is straightforward: I am informed that the projected Second Quarter (Q2) expenses for the Bureau are approximately $145 million,” Mulvaney wrote to Fed Chair Janet Yellen. “During my review of the financial condition of the Bureau, I learned that, as of the beginning of Fiscal Year (FY) 2018, the Bureau had a balance in the Bureau of Consumer Financial Protection Fund (“Bureau Fund”) at the Federal Reserve Bank of New York in the amount of $177.1 million. As the Act directs me to take into account the unobligated FY 2017 balance brought forward by the Bureau into FY 2018, all of which remains available in the Bureau Fund, I have determined that no additional funds are necessary to carry out the authorities of the Bureau for FY 2018, Q2. Simply put, I have been assured that the funds currently in the Bureau Fund are sufficient for the Bureau to carry out its statutory mandates for the next fiscal quarter while striving to be efficient, effective, and accountable.”

Later that year, however, Mulvaney made quarterly transfer requests of $98.5 million and $65.7 million for the third and fourth quarters of FY 2018 (respectively).

The letters transmitting the requests were posted on the bureau’s website.

Text: H.J.Res.31 – Consolidated Appropriations Act, 2019

Be the first to comment

Leave a Reply

Your email address will not be published.