CFPB budget woes underscore fundamental problems with bureau’s set up

The Consumer Financial Protection Bureau (CFPB) may run out of money soon, according to news reports. The bureau has been controversial from the start due to its method of funding and its regulatory policies and enforcement actions. CEI financial policy expert John Berlau says the current funding situation should have been foreseen by Congress from the start and that the acting director should prioritize funding to fight fraud and remove red tape.

Statement by John Berlau, CEI director of finance policy:

“If CFPB cheerleaders are upset about the level of funding for the agency, they have only themselves to blame. They were the ones who – in creating the CFPB under Dodd-Frank — put the CFPB’s funding mechanism outside the congressional appropriations process and under the sole authority of the bureau’s director. If the CFPB advocates think the funding level under current Acting Director Russ Vought is inadequate, they should do what my CEI colleagues and I, as well as other CFPB critics, have been urging for years – change the law and let the funding be determined by Congress.

“In the interim, Acting Director Vought should use his sound judgment for a funding level that allows the CFPB to both fight fraud and remove red tape from previous administrations that undermines legitimate businesses. Under the acting director’s tenure, we’ve seen a CFPB that made significant progress in trimming waste and dropping flawed enforcement actions and rules that threaten entrepreneurs and consumers. The breaking point for community banks and credit unions from the CFPB’s unnecessarily aggressive regulations and actions – not budget pressure for the bureau — should be the main focus of public policy for consumer finance.”

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