Trump signs bill slashing CFPB funding: What it means for consumers

President Trump signed a tax and spending law last week, cutting the Consumer Financial Protection Bureau’s budget by nearly half. Critics fear this may lead to less oversight of financial firms, posing harm to consumers. The CFPB was created after the 2008 financial crisis to protect consumers from harm.

The CFPB’s budget is funded by the Federal Reserve, with a cap of 12% of the Fed’s operating expenses. The new law signed by Trump lowers this cap to 6.5%, resulting in a 46% reduction in funding for the CFPB. Critics worry this will make it harder to police financial firms, especially large institutions.

The CFPB has three main functions: enforcement of laws, supervising financial firms, and handling consumer complaints. Since its inception, the agency has recouped $21 billion for consumers and imposed over $5 billion in penalties on financial firms. Despite budget cuts, the agency will continue its core functions.

Senate Republicans initially sought to eliminate the CFPB’s budget entirely. However, the new law reduces the agency’s funding without affecting its statutory functions, according to Sen. Tim Scott. Critics question if the CFPB will be able to fulfill its responsibilities in a weakened state. Funding could be more crucial in future administrations.

Experts believe that reduced funding under Trump’s second term may not have a significant impact, as funding requests have varied under different leadership. The CFPB hasn’t maxed out its spending limit in the past, and a reduced budget may not lead to significant changes in operations. The impact of the budget cut on agency operations is currently being reviewed in federal court.

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