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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  • Keep the budget as it is. Let Czar Warren work it out. We have been told over and over she was the chief architect and designer of the bureau and the law. If her work in creating the budget is reflective of the law itself, then the enforcement of the law as well as the bureau will both die of natural causes as they should and she will earn the credit she so richly deserves.

    The law and the budget for the related bureau are as sound as the reasoning that Senator Dodd brought into the law itself. It is too bad Chairman Frank lent his name to it. I respect the thinking of Chairman Frank on several issues.

    The bill was as bipartisan as the health care bill foisted on the 103rd Congress by now Secretary of State Clinton. Unlike today’s Democrats, the Congressional Democrats then were smart enough to reject that bill.

    May this Union not be burdened down with more enslaving debt. Senator Dodd, Czar Warren, and the President got what they requested, let the Czar work it out. Let the bureau eat cake.

    • Bill,

      I just listened to Ms. Warren express her views on the new bureau on a prerecorded segment of MSNBC, not exactly the Bill O’Reilly and Sean Hannity network. All she got were softball questions. She stated the CFPB was being created to restore honesty to the financial industry. Yet all she talked about were the credit markets. If that is the only problem which needed to be fixed by a “Consumer Financial Protection Bureau,” then I am foolishly wrong in my prior comment.

      But the idea behind the name of the bureau and the act was not solely focused on lending. It was much broader including protecting consumers from the nightmare of another undetected Madoff or Stanford and the devious stock and accounting tinkerings of Enron and Worldcom and their consultants. Further the law addresses one of the most convoluted of all financial products, derivatives. So what protections does this bureau provide for these consumer financial concerns?

      All the Czar focused on was upfront clarity regarding lending {and only lending} disclosures 1) detailing total costs, 2) explaining related risks and 3) allowing easy comparability of loans offered by other lenders. She never spoke about safeguards through tightening underwriting standards or through other means. Yet she discusses hiring from every corner of the lending universe. Why? Are her hiring goals excessive? Maybe the budget should limit her hiring?

      As to the limited focus of her presentation, who would not support Ms. Warren? Other than some fraud artists or slackers, who does not support these ideals? But now let’s look at the Congressional mandate to review reverse mortgages. The Czar did not even mention it. Nor did she mention any other mandate.

      Like Jeff Lewis, a thorough review of our industry is welcome — just as long as the bureau is not the tool of some politician who wants to blindly attack HUD and the program. We need to know more about our faults and problems so we can address, work on, and improve on those weaknesses. Constructive criticism should never be turned away. However, in her long repetitive interview, she expressed no thought about this mandate or any others.

      It seems Ms. Warren views her mission much more differently than most consumers and certainly Congress. If that is all she sees the bureau doing, then the budget is for Champaign and caviar served with edible gold garnish on gold plates and gold goblets with gold utensils and satin napkins — when it should be no more than basic cake and frosting served on paper plates with paper napkins and plastic utensils along with Hawaiian punch in paper cups. Based on her own comments, the Bureau budget should be slashed.

  • I thought the Cynic was to the point, said it like it should be said and right on target, except about Frank.

    Other than that, Cynic you did good. The whole Financial Regulatory Reform Bill needs to be repealed, revoked and put out to pasture. We need to start all over again with a bill that protects the American people, not put them in harms way!

    Again, Cynic keep saying it as it is!


    John Smaldone

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