President Donald Trump’s budget proposal for 2018 includes a suggestion to reduce the Consumer Financial Protection Bureau’s (CFBP) funding and restructure the agency to save $35 billion over the next decade.
An outline of the budget, called “A New Foundation For American Greatness,” says the $35 billion could be saved through “reforms that prevent bailouts and reverse burdensome regulations that hinder financial innovation and reduce access to credit for hardworking American families.”
One of the CFPB’s largest purposes is avoiding fallout in the event of a large, non-bank financial institution failing. It’s impossible to predict whether that will happen in the future, but under current law, Republican lawmakers and administration officials are concerned that taxpayers will be on the hook for bailing out those institutions.
Trump’s budget also proposes saving $6.9 billion by reducing the CFPB’s budget, which is currently funded by a Federal Reserve fund, and not subject to the Congressional budget process. Trump’s proposals and suggestions are completely dependent on legislative action, but indicate that the administration is looking for ways to reform the 2010 Dodd-Frank Act, which created the CFPB.
The Dodd-Frank act “has resulted in an unaccountable bureaucracy controlled by an independent director with unchecked regulatory authority and punitive power,” Trump’s budget document says.
The House of Representatives is considering the Financial Choice Act, which would reform parts of the Dodd-Frank Act to make the bureau more accountable to Congress. The Congressional Budget Office estimates that passing the Choice Act would reduce the federal deficit by $24 billion over the next decade. (RELATED: CBO Report: Restructuring Elizabeth Warren’s Consumer Agency Would Save $24 Billion)
The Choice Act has passed the House Committee on Financial Services and awaits a floor vote. One of the major issues attracting many retail organization lobbying against the bill is removal of fee caps for credit and debit card transactions.
“It’s the biggest sticking point in the bill for some people because it’s banks against retailers,” Tennessee Republican Rep. Scott DesJarlais said of that provision, which has been removed from the current bill. DesJarlais is doubtful that the House will get to vote on the bill this month. “I did think we were going to do this before Memorial Day,” DesJarlais said.
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