CRS Reports on CFPB Funding Cap Cut

The Congressional Research Service ("CRS") reviewed the impact of recent legislation, which significantly reduced the maximum amount of funding the Consumer Financial Protection Bureau ("CFPB") can request from the Federal Reserve. 

CRS explained that the CFPB is funded through transfers from the Federal Reserve rather than annual congressional appropriations, a structure designed to provide independence. CRS stated that while the Supreme Court recently upheld this funding mechanism as constitutional, Congress utilized its legislative authority to alter the agency's financial resources. CRS found that the legislation lowered the funding cap for fiscal year 2025 from a projected $823 million to $446 million, a reduction of approximately 46%. CRS noted that the Acting Director stopped requesting transfers from the Federal Reserve and indicated that the agency is currently drawing down its existing reserves, which are projected to be exhausted by early 2026.

CRS outlined various policy options available to Congress regarding the CFPB's future. They said that legislators could choose to restore previous funding levels, bring the agency under the standard congressional appropriations process, or functionally eliminate the agency by reducing its funding cap to zero.