CFPB Funding in Crosshairs of Senate Banking Committee’s Megabill Provisions

A so-called megabill grabbing headlines and making its way through Congress is on track to further alter the Consumer Financial Protection Bureau, an agency already in flux during the first few months of the President Donald Trump administration.

To that end, the Senate Banking Committee offered its provisions to be included in the “One Big Beautiful Bill” that was passed by the House and is now in the hands of the Senate.

The committee created a provision that would cancel funding for the CFPB from the Federal Reserve as well as change some of the funding of the Securities and Exchange Commission.

The moves are part of an effort to contribute to the bill’s funding cuts, as the Senate Banking Committee has been mandated to provide ways to cut spending by at least $1 billion through the next 10 years.

The provisions also indicate that the small business loan data collection rule that is set in place by Dodd-Frank Section 1071 will be postponed.

“Small business lending data is already collected by a number of public and private entities,” the committee said in a Friday (June 6) press release. “Postponing the implementation of this rule reduces these duplicative reporting requirements without compromising data collection.”

In terms of the mechanics of the CFPB’s funding sources, the CFPB has traditionally been funded by the Fed. The key metric has been that the funds have not been allowed to exceed a ceiling of 12% of the Fed’s operating expenses recorded in 2009. The CFPB indicated in its latest financial report that the transfer cap, as detailed in fiscal 2024, stood at $785.4 million.

The Senate provisions unveiled Friday would set that cap at 0%.

Various lawsuits have been lobbed at the CFPB focused on funding and the very constitutionality of the bureau. Critics have charged that the funding should be subject to the Congressional appropriations process.

The Senate’s effective zeroing out of the CFPB funding cap stands in contrast to House Republicans’ version of the megabill, which would cap the funding at 5% of the Fed’s 2009 operating expenses.

“This provision saves taxpayer dollars without affecting the statutory functions of the CFPB,” Banking Committee Chairman Tim Scott of South Carolina said in the Friday press release.

The CFPB’s financial statements indicated that salaries and benefits are among the highest expenses incurred by the regulatory watchdog. Those expenses amounted to about $27.6 million in the latest fiscal year. Staffing levels are now uncertain. Preliminary injunctions, lawsuits and layoffs targeting as much as 88% of employees as of April have been roiling the very structure of the CFPB.

In the meantime, the CFPB has been walking back, outright rescinding or seeking to render null and void a slew of rulemaking and proposals touching on everything from credit card-related fees to open banking data oversight.

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