S4521-118

What This Bill Does

This bill would remove the Consumer Financial Protection Bureau's (CFPB) independent funding and subject it to annual Congressional appropriations starting October 1, 2025. Currently, the CFPB receives automatic funding from the Federal Reserve, giving it stable resources without requiring yearly Congressional approval. This legislation changes that structure by making the Bureau depend on Congress to authorize and allocate its budget each fiscal year.

Who Benefits and How

Financial industry (banks, lenders, credit card companies, debt collectors): These entities would benefit because a CFPB dependent on annual Congressional appropriations is more vulnerable to budget cuts and political pressure. Industry lobbying could influence Congress to reduce CFPB funding, potentially weakening the agency's enforcement capacity and regulatory oversight.

Congressional oversight: Lawmakers gain direct control over CFPB funding levels, allowing Congress to shape the agency's priorities and scope through the budget process.

Who Bears the Burden and How

Consumers: Would face reduced protection from predatory lending, unfair credit practices, and financial fraud if CFPB enforcement is weakened due to budget constraints or political interference.

CFPB employees and operations: The agency would face annual budget uncertainty, potentially disrupting long-term investigations, rulemaking, and consumer complaint processing. Staff may be reduced or investigations curtailed if funding is cut.

Key Provisions

• Eliminates Federal Reserve funding: Strikes paragraphs allowing automatic funding transfers from the Federal Reserve to the CFPB
• Creates Congressional funding requirement: Authorizes appropriations "such funds as may be necessary" for FY2026, making the CFPB compete with other agencies for Congressional budget allocations
• Redirects penalty funds to Treasury: Requires excess amounts in the Civil Penalty Fund (after paying victims) to be transferred to the general Treasury rather than remaining with the Bureau
• Effective date: Changes take effect October 1, 2025, giving Congress time to include CFPB in the regular appropriations cycle