All 11 Democrats on the U.S. Senate Banking Committee introduced a bill earlier this month to automatically and fully fund the Consumer Financial Protection Bureau (CFPB), according to a release from the committee’s minatory members.
According to the release, the bill requires mandatory transfers to the CFPB of at least 12% of the total operating expenses of the Federal Reserve, up to the amount under the Dodd-Frank Act “reasonably necessary to carry out the authorities of the Bureau under Federal consumer financial law.”
The bill has not advanced since being introduced.
“The CFPB has put more than $21 billion back into consumers’ pockets, underscoring that a strong and independent watchdog can make a real difference in the lives of millions of American families,” said Mike Calhoun, president of the Center for Responsible Lending. “This legislation would help safeguard the agency’s ability to continue protecting families from financial abuse, policing unfair practices and holding bad actors accountable. It would also ensure that no future administration can effectively dismantle the nation’s consumer watchdog by depriving it from the resources it needs to do its job.”
The release noted that ranking member Elizabeth Warren led her colleagues in introducing this bill, including Sens. Jack Reed (D-Rhode Island), Mark Warner (D-Virginia), Chris Van Hollen (D-Maryland), Catherine Cortez Masto (D-Nevada), Tina Smith (D-Minnesota), Raphael Warnock (D-Georgia), Andy Kim (D-New Jersey), Ruben Gallego (D-Arizona), Lisa Blunt Rochester (D-Delaware), and Angela Alsobrooks (D-Maryland).
Committed to Funding Agency
Warren said that the Democrats on the committee are committed to funding the agency.
“Donald Trump and his Administration launched an assault on the Consumer Financial Protection Bureau, trying to drain it of its resources so it could no longer stop big banks and giant corporations from scamming Americans out of their money,” said Ranking Member Warren. “Democrats are united in fully funding the CFPB when we take back Congress.”
According to the release, the bill is endorsed by the National Consumer Law Center (on behalf of its low-income clients), the Consumer Federation of America, Americans for Financial Reform, Protect Borrowers, the National Community Reinvestment Coalition, and the Center for Responsible Lending.
“The cost of living has skyrocketed, and in the face of growing risks from predatory payday lending apps and crypto scams, this Administration is actively gutting the Consumer Financial Protection Bureau,” said Alys Cohen, director of federal housing advocacy and acting co-director of federal advocacy at the National Consumer Law Center. “Congress should swiftly approve Senator Warren’s bill to restore the CFPB’s funding, a critical step toward getting Washington’s only agency dedicated to protecting consumers back to work.”
Adam Rust, director of financial services for the Consumer Federation of America, said the bill will ensure that the agency can carry out its mission.
“By locking in a 12% funding floor and making disbursements mandatory, this bill ensures that invented legal theories cannot sideline the CFPB from protecting people from financial predators. The CFPB’s record speaks for itself. Every dollar the Fed has sent to the CFPB has been returned many times over to consumers through direct remedies and avoided harms,” Rust said.
Financial Markets
Tom Feltner, Associate Director of Consumer Policy at Americans for Financial Reform, the bill could help put the financial markets back in order.
“Restoring CFPB funding for robust consumer financial protections is a first step to rein in Wall Street, big banks, and predatory lenders who have been emboldened by this administration to fleece people. This bill would help put our financial markets back in order after more than a year of skyrocketing junk fees, the explosion of scams and fraud, and unrestrained financial surveillance,” Feltner said. “Congress has the power to side with everyday people and their economic futures instead of another give-away to banks and big tech companies. We urge swift consideration and passage of this legislation.”
In May, Senate Republicans shot down more than a dozen measures backed by Democrats to undo the administration’s dismantling of the CFPB.
Democrats forced votes on multiple resolutions targeting rules and regulatory changes made during President Trump’s second term, including resolutions on the CFPB’s policy on overdraft fees, credit report privacy and mortgage lending.
In late May, the CFPB was sued by fair housing organizations over a rule change that the groups said would reverse decades of lending protections and open the door to discrimination against Black people, Latinos, and other minorities.
The organizations filed the federal lawsuit on Wednesday in Washington, D.C..
The lawsuit targets a change made earlier this year by the CFPB to the Equal Credit Opportunity Act that prohibits lenders from discriminating against credit applicants. Among the changes being challenged in the lawsuit is that lenders no longer will have to consider “disparate impact” — policies that appear neutral but tend to cause disproportionate harm to certain groups.
The plaintiffs argue that the rule would make it easier for lenders to market loans to predominantly white neighborhoods, forcing minority communities to rely on risky, high-cost lenders that offer predatory loans with exorbitant interest rates, The Boston Herald reported.
