Since the passage of the Dodd-Frank financial reform law, Republicans have been threatening to use the appropriations process to undermine the new reforms, particularly the Consumer Financial Protection Bureau. True to their word, the GOP’s 2012 financial services appropriations bill would deal the CFPB a couple of crucial blows if it were ever to become law:
The bill would bring the CFPB’s budget under the purview of appropriators starting in 2013. Currently, its funding falls outside the reach of lawmakers, as it receives transfers from the Federal Reserve to fund its operations…The bill would limit the mandatory funds provided to the CFPB to $200 million — less than half of what it can receive currently. The move serves to effectively cap its spending before bringing it under the appropriations process. Under Dodd-Frank, CFPB funding levels are set as a percentage of 2009 Federal Reserve spending. In fiscal 2012, the CFPB expected to receive a maximum of roughly $550 million.
“This bill exemplifies the commitment of the Republican majority to reduce spending, dig our nation out of record deficits, and rein in unnecessary agency regulation and interference that obstructs economic growth,” said House Appropriations Committee Chairman Hal Rogers (R-KY). But the practical upshot would be giving the financial industry free rein to continue promulgating predatory financial products.
The CFPB, like other banking regulators such as the Office of the Comptroller of the Currency, was given an independent source of funding so that Congress couldn’t protect the banking industry by threatening to cut off the Bureau’s funds. Cutting the Bureau’s funding by more than half would, of course, limit its ability to police the financial services industry.
But it isn’t only the CFPB that is under assault in this particular piece of GOP legislation. The Consumer Product Safety Commission would also see its funding cut by $3.5 million under the Republican plan, and would be prevented fro setting up a new consumer safety database that it has been working on.
The GOP has already prevented the CFPB from doing its job by indicating that they will block any nominee to lead the Bureau — even if the nominee were a Republican — which means that the Bureau will not be able to exercise its full power when it becomes officially operational on July 21. When it comes to the CFPB, it seems that the entire GOP is taking House Financial Services Committee Chairman Spencer Bachus’ instruction to “serve the banks” quite literally.