The Republican-controlled House passed legislation recently aimed at modestly curbing the growth of the Consumer Financial Protection Bureau, the agency established by the 2010 overhaul of financial regulations to enforce laws aimed at protecting consumers from unfair or illegal practices by banks, mortgage lenders and other financial services providers.
The measure would cap the agency’s budget at $655 million in 2020 and $720 million in 2025. This year’s budget is $582 million.
The agency was established under the 2010 Dodd-Frank law to tighten regulation of Wall Street after the 2008 financial meltdown.
The law, named after its main authors, former Sen. Christopher Dodd, D-Connecticut, and retired Rep. Barney Frank, D-Massachusetts, is opposed by most Republicans who complain that the consumer agency is unaccountable to significant congressional oversight.
The budget cap was added to a separate bipartisan bill to give small businesses a greater voice in influencing the bureau’s decisions and cement the existing advisory role of credit unions and community banks.
“An agency as powerful as the CFPB will benefit from the advice of small businesses, community banks and credit unions,” said House Financial Services Committee Chairman Jeb Hensarling, R-Texas. “The CFPB should listen to them so it can issue smart regulations rather than dumb regulations that harm Main Street America.”
The 235-183 vote fell well short of the two-thirds margin required to overcome a White House veto threat . The vote broke mostly along party lines. The underlying bill enjoyed sweeping support in the Financial Services panel, but the additional curbs to the growth of the consumer agency’s budget turned the floor debate partisan.
Republicans said the budget moves were required to pay for the modest cost of the underlying measure. Democrats said the budget cuts would be more severe than Republicans claimed and would set an unfortunate precedent that an agency dedicated to protecting consumers could be used as a piggy bank for other purposes.
The White House said the budget curbs could undermine “critical protections for families from abusive and predatory financial products.”