GOP lawmakers file bill to defund the CFPB

Republican lawmakers have filed legislation to defund the Consumer Financial Protection Bureau, adding more uncertainty over GOP plans for the financial regulator. 

Sen. Ted Cruz, R-TX, introduced this week the Defund the CFPB Act, which if passed would give zero transfer payments from the Federal Reserve to the bureau, a funding structure created under the Dodd-Frank Act. The CFPB's transfers are not subject to congressional approval, giving it greater independence.

"The CFPB is an unelected, unaccountable bureaucratic agency that has imposed burdensome and harmful regulations on American businesses, banks, and credit unions," said Cruz in a statement. 

The regulator received $729.4 million in transfers from the Fed for fiscal year 2024, according to a December report by the nonpartisan Congressional Research Service. Its projected budget for FY2025 is $810.6 million, under an inflation-adjusted funding cap of $823 million. 

The Bureau has been a target of ire for financial services businesses including housing finance players, who take issue with its loan officer compensation rule among other actions. However, industry stakeholders like the Mortgage Bankers Association don't advocate for the CFPB to be shuttered but rather seek opportunities to work together on forming regulation. 

The MBA last week sent a letter to the CFPB to urge it to halt further work on its nonbank Registration Regulation. That request was addressed to Director Rohit Chopra, the Democrat department head still sitting under the new Trump Administration's overhaul. 

Sen. Tim Scott, R-S.C., chairman of the Senate Banking Committee, earlier this week hinted at an imminent "blockbuster" announcement regarding a new CFPB leader. He attributed the delay in Chopra's firing to the Vacancies Act, which would place an existing Chopra deputy as the acting head by default. The chairman also said he would support changes to the bureau's statutory funding caps. 

The defunding bill this week was co-sponsored by GOP lawmakers including Sen. Mike Rounds, R-S.C., also a majority member of the Senate Banking Committee. The bill was also supported by the Texas Credit Union Association and the Texas Bankers Association, Cruz's office said. 

In a statement Thursday, TBA CEO and President Chris Furlow backed the defunding call by accusing the bureau of hypocrisy, which oft issues redlining punishments but settled its own discrimination suit for $6 million in 2023. 

"No agency should be allowed to exercise authority without accountability to the people's elected representatives, yet CFPB's current funding structure enables just that," said Furlow.