Aaron Schwartz/Sipa USA via AP Images
Chairman Rep. French Hill (R-AR) is seen during a House Committee on Financial Services hearing in February on Capitol Hill in Washington.
Much to the delight of Wall Street and billionaires everywhere, the Trump administration, Elon Musk’s so-called Department of Government Efficiency, and Project 2025 architect Russell Vought have waged a war against the Consumer Financial Protection Bureau (CFPB). Yet despite numerous attempts to annihilate the financial watchdog going back to its inception in 2010, it has stubbornly survived, perhaps because people like an agency that has helped secure $21 billion in relief for millions of wronged consumers.
Congressional Republicans are now carrying the sword that would slay the CFPB, this time under the guise of nonexistent cost savings.
During a heated hearing of the House Financial Services Committee on Wednesday, Republicans advanced their section of the giant Trump agenda budget reconciliation package, which would effectively cripple the CFPB. The Republican plan sharply reduces the existing cap on the amount of money the agency can request from the Federal Reserve annually (a staggering 70 percent funding cut), and relinquishes the CFPB’s Civil Penalty Fund to the U.S. Treasury, which would severely limit its ability to provide restitution to victims of financial fraud.
This plan to “reduce expenditures” hardly does anything to achieve that goal. “It’s not really about saving taxpayer money or anything related to the budget. It’s about getting rid of the Bureau,” Christine Hines, senior policy director at the National Association of Consumer Advocates (NACA), told the Prospect.
That sentiment was shared by House Democrats, who proposed a flurry of unsuccessful amendments to prevent the cuts. Directly addressing committee chair Rep. French Hill (R-AR), Rep. Sean Casten (D-IL) challenged Republicans’ pretenses for gutting the CFPB. “You either fund it or just admit that you’re trying to screw consumers,” Casten said. “Let’s not sugarcoat what’s going on here.”
Because the CFPB receives its funding out of Federal Reserve revenues and not congressional appropriations, there are no on-budget savings from this cap. And the total annual amount of maximum savings from the new cap, which would fall from $823 million to $249 million in the first year, with an annual inflation adjustment thereafter, is only $574 million, a minuscule amount relative to the overall federal budget but a catastrophic cut to the agency. The CFPB has routinely brought back more in consumer relief than it spends on an annual basis, but a majority of its work would be unable to be conducted with that level of funding, including statutory obligations.
Raiding the Civil Penalty Fund would increase revenues to the government, but would do so at the expense of consumers who are harmed by a company that subsequently goes out of business and is unable to pay restitution. In these cases, the CFPB can dip into the fund to provide consumer relief. That would end with this bill, as all money from civil penalties would be moved to the Treasury.
The Republican plan seeks to permanently impede the Bureau’s ability to protect consumers from fraud and safeguard personal financial data. In an April 29 letter circulated by the National Consumer Law Center, Chuck Bell, advocacy programs director at Consumer Reports, called on the committee to oppose the funding cut and “all legislative attempts to change the CFPB’s independence, funding and structure.”
Nearly 350 civil society organizations and academics signed the letter, including NACA, which has been pressuring Congress to preserve the agency. Ira Rheingold, the organization’s executive director, also submitted a declaration in support of the union for CFPB, which sued Vought over his efforts to fire approximately 1,500 workers and suspend the Bureau’s operations. As the Prospect reported, Vought brazenly attempted to fire most of the agency’s employees again in mid-April. However, an appeals court recently restored the preliminary injunction that halted the firings until the conclusion of the appeal in May.
“The agency is being attacked on all fronts right now,” Hines told the Prospect. “We’ve been pretty loud about where we stand and the importance of the agency in protecting consumers across the country.”
Consumers across the country overwhelmingly support the CFPB. According to a recent poll, two-thirds of Americans approve of the agency, largely across party lines.
“Republicans are seeking to destroy the CFPB because they know it is working,” Rep. Nydia Velázquez (D-NY) said at the hearing. “In fact, it is remarkable to me that Republicans are spending such a significant amount of their time to destroy an agency that Americans overwhelmingly support.”
Along with Velazquez, several other Democratic committee members fought in vain to stave off the Republican onslaught against the CFPB. Among them was Rep. Brittany Pettersen (D-CO), who attended the hearing with her infant son. Pettersen proposed an amendment that would have transferred excess funds secured through Military Lending Act enforcement actions, which are held in the Civil Penalty Fund, to the Housing and Urban Development Veterans Affairs Supportive Housing program, which has been proven to reduce veteran homelessness. Like every other Democratic amendment, it was struck down.
The regard congressional Republicans have for service members appeared to go out the window when it came to advancing a crude political agenda.
Another amendment proposed by Rep. Ayanna Pressley (D-MA) sought to make bad financial actors responsible for funding the CFPB. The move would have created a direct financial consequence for misconduct and incentivized Wall Street to not violate consumer financial protection laws, she said. “The CFPB is funded through transfers from the Federal Reserve that are capped annually, but Republicans want to defund the CFPB to pay for tax breaks for billionaires. That doesn’t sound like a fair trade.”
The amendment was foiled by Republicans, who repeatedly regurgitated the same line about how Washington cannot “spend money like there are no consequences.” This bogus logic undergirds the backbone of the GOP mega-bill. Although the trajectory of the reconciliation package is unclear, it is crystal clear that the Republican plan for the CFPB is to undermine consumer financial protection nationwide, enabling fraud and making it easier for companies that go bankrupt to rip off working-class Americans.
“The CFPB was created after the financial crisis because it was very clear that there was no one looking out for just working families,” Hines told the Prospect. “That’s the road we’re going down again. It’s just inviting another financial crisis.”
