CFPB Funding Might Not Be Enough to Fulfill Congressional Mandate

Speaking earlier this week, James Bullard, president of the Federal Reserve Bank of St. Louis said funding for the Consumer Financial Protection Bureau (CFPB) may not be enough to fulfill the mandate from Congress.

As part of the sweeping Dodd-Frank reform bill, an independent Consumer Financial Protection Bureau will be created and housed within the Federal Reserve, but it’s only engagement is funding the agency.  The law requires that the equivalent of 10 percent of Federal Reserve System expenses be transferred to the CFPB in 2011, 11 percent in 2012, and 12 percent in 2013.

“I am concerned about this method of funding for the Bureau,” said Bullard in prepared remarks. “The amount of money allocated in the law is not based on any careful assessment of what the needs of the Bureau will be as it attempts to fulfill the mandate of the Congress with regard to consumer protection.  Nor is there any mechanism for changing these amounts going forward, should market conditions change, or if the needs of the Bureau change.”

The Bureau is required to be up and running by July 21, 2011, a substantial undertaking considering the scope of responsibilities which include writing new regulations for the financial sector and assuming enforcement and supervisory roles for all institutions with more than $10 billion in assets.

In addition, the agency is required to set up several functional offices, including units related to research, community affairs, consumer complaints, a fair lending office, an office of financial education, and an office of financial protection for older Americans.

Within the first year, the Bureau is also required to conduct a study on reverse mortgages to identify deceptive practices and figure out whether suitability standards are necessary.  The agency also has the authority to issue regulations, orders, or guidance that apply to reverse mortgages prior to the completion of the study.


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