Funding for the Consumer Financial Protection Bureau (CFPB) would be cut by $23 million in fiscal year 2020, with total funding reductions of about $5 billion through FY 2029, according to White House budget documents.
Additionally, the budget includes a call to “restructure” the bureau to provide for “discretionary appropriations beginning in 2021.” The congressionally appropriated funds, in the view provided by the budget, would make up remainder of the agency’s funding, as necessary, for the year.
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.
Any change to that set-up would require congressional action.
Nevertheless, the FY2020 budget proposed by the Trump administration calls for capping transfers from the Fed to the bureau during 2020 to an amount equivalent to that transferred in 2015 – $485 million (the $23 million reduction). After that, according to the proposed budget, reductions become more pronounced. In FY2021, funding would be reduced by $508 million; in FY2022, it would decline by $515 billion. Following that (through FY2029), funding would be reduced by an average of about $13 million each year, with FY2029 funding by the Fed reduced by $607 million.
Over the period of 2020-29, the budget estimates, Fed funding of the bureau would be reduced by $5 billion overall.
Any additional funds required by the bureau in those years would be made up by congressional appropriations.
According to the proposed budget, the reductions are based on the estimated funding that would be available to the CFPB from the Fed under current law.
In 2017, the Fed reported CFPB-related costs totaling $573 million. In 2018, according to preliminary results issued in January, the Fed reported bureau-related costs of $337 million.