Extreme budget cut will cripple the CFPB’s ability to protect consumers; Consumer Reports calls on Senate to restore the CFPB’s funding
WASHINGTON DC – Tucked away in the more than one-thousand-page budget reconciliation bill passed by the House today is a provision that cuts the budget of the Consumer Financial Protection Bureau by 70 percent. Combined with other recent moves to limit the CFPB’s supervisory and enforcement activities, the extreme budget cut would severely undermine the Bureau.
“Congressional opponents of the CFPB have been gunning for the Bureau ever since it was established to root out discrimination and abusive financial industry practices that cheat working families out of their hard-earned money,” said Chuck Bell, advocacy program director at Consumer Reports. “This massive budget cut on top of the ongoing efforts to gut the CFPB would make it impossible for the Bureau to carry out its critical mission to protect consumers.”
Bell continued, “Slashing the CFPB’s budget would essentially muzzle the consumer watchdog that has worked tirelessly to protect consumers who have been mistreated by banks, credit card companies and predatory lenders. Lawmakers who support cutting the CFPB’s budget are leaving consumers unprotected and at risk of falling victim to financial fraud and abuse. The Senate should stand with consumers and restore the CFPB’s funding.”
Congress created the CFPB after federal financial regulators failed to rein in risky mortgage lending, which triggered the 2008 financial crisis and caused millions of Americans to lose their homes to foreclosure. The CFPB was established with independent funding through the Federal Reserve in order to shield it from the political pressure wielded by the powerful financial industry and to ensure consistent operations. The budget passed by the House limits the CFPB’s funding to 5 percent of the Fed’s total operating expenses – down from the current limit of 12 percent.
Since its founding, the CFPB has helped tens of millions of consumers resolve their complaints with financial firms and secured more than $21 billion in refunds and relief for an estimated 205 million consumers who were treated unfairly.
Over the past few months, the administration has halted most of the CFPB’s supervisory and enforcement efforts, dismissed or withdrawn more than half of the CFPB’s lawsuits against banks and predatory financial firms, and sought to fire all but a small number of the Bureau’s staff.
Media Contact: Michael McCauley, michael.mccauley@consumer.org