U.S. Senate Allows Funding Cuts for Consumer Financial Protection Bureau

(Reuters) – The U.S. Senate’s nonpartisan referee has allowed Republicans to proceed with a measure to slash funding for the government’s top watchdog agency for consumer finance by almost half, a week after blocking an effort to eliminate funding completely, top lawmakers said late on Thursday.

If adopted, the measure could add to Republican efforts this year to cut the Consumer Financial Protection Bureau’s (CFPB) workforce and substantially limit its powers. A top Democrat immediately vowed to try to block the measure.

Republican Tim Scott, chair of the Senate Banking Committee, stated that Parliamentarian Elizabeth MacDonough had ruled that a measure to lower the legal cap on CFPB funding could be approved by a simple majority vote, paving the way for its inclusion in a sweeping tax-cut and spending bill driven by President Donald Trump.

MacDonough’s role is to ensure lawmakers follow proper legislative procedure.

If approved, the measure would cut maximum CFPB funding to 6.5% of the Federal Reserve’s earnings from 12%, meaning the agency would likely employ fewer people and have a more limited reach.

Last week, MacDonough found that a measure reducing this limit to 0% was ineligible for consideration via a simple majority vote as the House and Senate work to reconcile their spending bills.

Scott said in a statement that the change would help cut “waste and duplication in our federal government and save hardworking taxpayer dollars.”

The CFPB is funded by the Federal Reserve, so is not supported by taxpayers. The central bank earns income from services it provides the financial system and from interest income on securities it owns.

Republicans have attacked the CFPB since its creation more than a decade ago, claiming it burdens free enterprise. President Donald Trump called this year for its elimination, accusing it, without evidence, of politicized enforcement.

Democrats assert that since the agency was established, it has returned more than $20 billion to harmed consumers.

Senator Elizabeth Warren, the top Democrat on the Banking Committee and a key proponent of the CFPB, stated separately that Democrats would introduce a measure to eliminate the funding cut. She described the Republican move as slashing CFPB funding “so they can hand out more tax breaks for billionaires and billionaire corporations.”