What Does $448 Million Get You? A Whole Lot of CFPB

As the CFPB gets its feet wet in monitoring and enforcing consumer financial protections, it has come under examination on another front: how much it costs.

CFPB Director Richard Cordray presented testimony Wednesday before members of a House Financial Services subcommittee in defense of the CFPB’s increasing price tag for taxpayers. According to the Administration’s latest budget proposal released Monday, the cost of the agency will amount to $448 million in 2013. Because it is not subject to the congressional appropriations process, it also has the ability to request more.

The “No Appropriations” Process


Many government departments, such as the Department of Housing and Urban Development and the Commerce Department have to go through a Congressional appropriations process. The legislative branch is subject as well. This means Congress will agree upon and approve spending amounts designated for different parts of government. The CFPB, however, is not currently subject to that process. Instead, it can receive a percentage of the Federal Reserve’s yearly operating expenses, up to $597 million in 2013. After it receives that amount, it can still request additional funding, as it sees fit.

Republicans have long opposed this arrangement, arguing that the CFPB should be subject to appropriations.

“The CFPB, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is specifically designed to evade congressional oversight,” says a recent statement from the House Financial Services Committee. “The congressional appropriations process is the most time-tested method for monitoring the effectiveness of government agencies and holding them accountable to the American taxpayer. Yet the CFPB receives its funding outside the appropriations process through a mandatory transfer of funds from the Federal Reserve.

Rep. Randy Neugebauer (R-Texas) introduced legislation as one of several CFPB reforms that would change this process to make the CFPB like other regulators.

“No one in government should be allowed to spend hundreds of millions of dollars with no questions asked,” said House Financial Services Committee Chairman Spencer Bachus (R-Ala.). During Wednesday’s hearing Rep. Bachus noted that the CFPB could buy $100 million worth of paper clips without anyone having to approve that spending.

But the agency will come in under budget, Cordray said in prepared remarks for the hearing.

“Now that we completed our statutory transition period and have become a full-fledged independent agency with the legal responsibility to protect American consumers in the financial marketplace, our expenditures have naturally increased,” Cordray said. “As you can see in our budget justification, however, our budget estimates remain considerably below our budget cap at $356 million for 2012 and $448 million for 2013. At this time, we have no plans to ask Congress for any further appropriations, as we are authorized to do by law.”

In his remarks, Cordray noted that the CFPB budget is “small relative to the other banking agencies,” despite its critical mission—to make life better for American consumers.

What Does $448 Million Buy?

The CFPB, which touts transparency as one of its highest priorities, has published its spending plans and goals on its website.

“Mortgages allow people to buy homes and spread the payments over many years….Products like these can help people achieve their dreams,” Cordray said in the hearing Wednesday. “But as we have seen in recent years, they also can create dangers and pitfalls if they are misused or misunderstood.”

The CFPB is currently at work, doing on-site non-bank examinations.

“We will use all the tools available in our effort to ensure everyone follows the rules of the road,” Cordray said. “Where we can cooperate with financial institutions to do that, we will; but when necessary, we will not hesitate to use enforcement actions to uphold the law and right a wrong.”

The agency, which has continued to build staff after officially launching in July 2011 now has a staff of 757,with nearly devoted to supervision, enforcement, fair lending, and equal opportunity;

The enforcement comes at too steep a price, members of the House subcommittee argue.

“The decision to fund the CFPB outside of the appropriations process deprived Congress of a major tool for overseeing its operations,” said the Subcommittee chairman Rep. Randy Neugebauer. “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. This hearing is important to preserve some semblance of checks and balances on the CFPB until we can subject it to annual appropriations.”

Written by Elizabeth Ecker

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  • I hope more comes to the surface about the CFPB and the danger it proposes to create for our industry as well as the entire financial industry. More needs to be known about the Financial Regulatory Reform Bill (Dodd-Frank) by the American people.

    I am glad to see a story like this published by the Daily Post and Elizabeth Ecker. We need many more articles about the CFPB in order to expose the power granted to them by this bill.

    John A. Smaldone

  • The dangers created by Countrywide selling directly to fannie mae.
    And then fannie mae’s guy now works in Obama’s cabinet. You see
    its like the part in the movie when the bad guy is on the phone…and
    the call is “coming from inside the house”

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