House committee votes to slash CFPB funding
The House Appropriations Committee voted Thursday to cap funding for the Consumer Financial Protection Bureau at less than half of what was originally estimated for the agency. The legislation provides annual funding for the Treasury Department, the Securities and Exchange Commission and other agencies for fiscal 2012. According to the bill, the Federal Reserve, which will fund the CFPB, cannot obligate more than $200 million to the agency, but the Fed estimates the CFPB will require $500 million. The bureau is scheduled to open July 21 and will become the de facto regulator for the entire mortgage industry, from origination to servicing. According to Dodd-Frank, the Fed will supply 10% of its expenses to form the agency through its first year. That goes up to 11% in the second year and 12% every year after. Under Dodd-Frank, the Fed can go to Congress for an additional $200 million if needed. The overall bill, which also funds other agencies besides the CFPB, provides $19.9 billion in funding for the agencies, nearly $2 billion or 9% below last year's level and nearly $6 billion below President Obama's request. "This bill makes smart, sensible reductions in nearly all areas. Where necessary, we have cut funding for ineffective and unproven programs, and have made strides to prevent taxpayer dollars from slipping through the cracks, lost to redundant or wasteful programs," said House Appropriations Chairman Rep. Hal Rogers (R-Ky.). Lisa Donner, executive director of the consumer group Americans for Financial Reform, said the bill undermines the independence of the CFPB. "They are trying to turn the CFPB into a weak and timid agency, without the will or ability to curb the kind of financial abuses that caused the nation’s worst financial crisis since the Great Depression," Donner said. The bill will go to the House floor for consideration, but no date has been set. Write to Jon Prior. Follow him on Twitter @JonAPrior.