Trump budget would give Congress control of consumer bureau

President Trump’s fiscal 2019 budget would give Congress control over key financial regulators created by the Dodd-Frank Act.

The budget proposes subjecting the Consumer Financial Protection Bureau (CFPB), the Financial Stability Oversight Council (FSOC) and the Office of Financial Research (OFR) to the congressional appropriations process.

That would give lawmakers broad authority to change those agencies, something Republicans have long sought to do. 

{mosads}The White House budget proposes placing the agencies, all independently funded from other federal entities, under Congress’s control by 2020. The budget proposes steep cuts to the regulators, which have been fiercely defended by Democrats. Trump offered similar proposals in his fiscal 2018 budget released last year.

The CFPB would no longer be funded through the Federal Reserve system and would receive drastic cuts in funding. The bureau, currently run in an acting capacity by Mick Mulvaney, the director of the White House Office of Management and Budget, would receive $6.4 billion less in funding over 10 years.

The White House said the changes would reign in the CFPB and “impose financial discipline, reduce wasteful spending, and ensure appropriate congressional oversight.”

“These changes would allow CFPB to focus its efforts on enforcing enacted consumer protection laws and eliminate the functions that allowed the Agency to become an unaccountable bureaucracy with unchecked regulatory authority,” said the White House.

Mulvaney has already taken measures to restrain the CFPB’s power and funding. He requested $0 from the Fed in January to fund bureau operations for three months, citing plans to draw down the bureau’s $177 million emergency reserve account with the Fed’s New York branch.

The White House budget would also give Congress control of the FSOC and OFR budgets, which are currently funded by the Treasury Department, their host agency.

FSOC is an inter-agency group of top regulators charged with finding excessive risk in the financial system. OFR is meant to assist regulators with economic analysis and research into financial trends.

Republicans have criticized the process through which FSOC’s deems banks and financial firms “systemically important,” which subjects them to tighter federal oversight. A bipartisan coalition of lawmakers in both chambers is attempting to change the criteria FSOC uses to classify banks and financial firms.