House to scrutinize $448 million CFPB budget

Consumer Financial Protection Bureau Director Richard Cordray will give his fourth testimony before Congress Wednesday since taking the post in mid-January.

A House subcommittee will question Cordray on the bureau’s 2013 budget.

The CFPB estimates it will spend $356 million in 2012 as part of its continued buildup. This will increase 26% in 2013, according to the budget to roughly $448 million.

Under the Dodd-Frank Act, the bureau can use up to 12% of the Federal Reserve budget in 2013, which is estimated to be roughly $598 million. It could also request an additional $200 million above that, which Cordray said in his prepared testimony the bureau is not expected to need.

“While our budget is small relative to the other banking agencies, our mission is critical. Our budget is a means to an important end – to make life better for American consumers. Much is at stake,” Cordray said in the testimony.

By comparison, the Securities and Exchange Commission is expected to spend $1.5 billion in 2013, and the Office of the Comptroller of the Currency budget is expected to reach above $1 billion that same year. 

The CFPB budget is not subject to appropriations committee approval.

Rep. Randy Neugebauer, R-Texas, and chair of the subcommittee, introduced a bill last year that would move CFPB funding under the Treasury Department and thus under appropriations control.

“Despite the obstacles created by Dodd Frank, the committee is still hoping to get some idea of how CFPB programs are being run and at what cost,” Neugebauer said.

Democrats argue by putting the bureau under appropriations committee control, Republicans could strip funding and hurt the CFPB supervision role.

The most increases in 2013 will go toward the supervision and enforcement, according to Cordray. This includes on-site examinations at the largest banks that will begin this year, along with investigations into possible violations.

The CFPB added $47 million to this function for a total of $261 million in 2013, more than half of its budget. The CFPB plans to spend another $126 million on consumer education and sorting out consumer complaints, a $42 million increase from the year before.

The bureau is also spending more than $60 million on research and plans to build data bases on the loan level.

The hearing Wednesday will be the 14th session over CFPB policies, since the Dodd-Frank created the bureau. A group of Republican Senators are joining a court fight to reverse President Obama’s recess appointment of Cordray.

Meanwhile, the director said in his latest testimony the bureau will remain as transparent as it can, posting financial statements, Government Accountability Office audits, a separate independent audit on its website. He said he expects businesses the bureau will supervise to be just as open.

“One of our main objectives is to make sure the costs and risks of financial products are clear,” Cordray said in the testimony. “People make their own decisions, and nobody can or should try to do that for them. But it is the American way for responsible businesses to be straightforward and upfront with their customers, giving them all the information they need to make informed decisions.”

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