Hands-off Fed to give consumer protection bureau $500 million
The Consumer Financial Protection Bureau will require $500 million in funding from the Federal Reserve, which will take no part in the decision making at the new regulatory giant, said Sandra Braunstein, director of the consumer and community affairs division at the Fed. Speaking at the Wolters Kluwer CRA & Fair Lending Colloquium in Las Vegas, Braunstein said there will be a "humongous wall" between the Fed and the CFPB when it comes to rulemaking. While the Fed has identified more than 250 regulatory projects to complete under the Dodd-Frank Act, Braunstein said about the CFPB, "Our role is to write the check." According to Dodd-Frank, the Fed will supply 10% of its expenses to the formation of the CFPB through the first year. That goes up to 11% in the second year and 12% every year after, up to roughly $500 million. If that's not enough, the Fed can go to Congress an additional $200 million. "The Fed has nothing to say on how or where it is spent," Braunstein said. The CFPB is set to go into effect July 21, 2011 and along with writing new regulations for the financial sector, it will assume enforcement and supervisory roles for all institutions with more than $10 billion in assets. Existing regulators and the industry are shuffling their operations before that deadline. Write to Jon Prior.