A Financial Services subcommittee hearing marked the first time Congress
examined spending by the Consumer Financial Protection Bureau (CFPB).
The CFPB, which was created by the Dodd-Frank Act, is specifically
designed to evade congressional oversight. The congressional
appropriations process is the most time-tested method for monitoring the
effectiveness of government agencies and holding them accountable to the
American taxpayer. Yet the CFPB receives its funding outside the
appropriations process through a mandatory transfer of funds from the
Federal Reserve.
By
law, the Federal Reserve must transfer to the CFPB whatever funds its
director requests up to a certain percentage of the Fed’s yearly
operating expenses. For fiscal year 2013, that amount equals $597
million. If the CFPB director deems this amount to be insufficient, the
director can ask Congress for an additional $200 million. In the last 18
months, the CFPB has requested more than $338 million from the Federal
Reserve.
The Dodd-Frank Act also prohibits the House and Senate appropriations
committees from reviewing how the CFPB spends its money.
“No one in government should
be allowed to spend hundreds of millions of dollars with no questions
asked,” said Chairman Spencer Bachus. “This hearing will allow us to
focus a little bit of sunshine on CFPB spending, but until there are
structural reforms to the bureau there can be no real oversight of it.”
Rep. Randy Neugebauer, the Chairman of the Oversight and Investigations
Subcommittee, said, “The decision to fund the CFPB outside of the
appropriations process deprived Congress of a major tool for overseeing
its operations. Despite the obstacles created by Dodd Frank, the
Committee is still hoping to get some idea of how CFPB programs are
being run and at what cost. This hearing is important to preserve some
semblance of checks and balances on the CFPB until we can subject it to
annual appropriations.”
Rep. Neugebauer has introduced a bill to subject the CFPB to the
congressional authorization, budget and appropriations process. The
legislation, H.R. 1355, was reviewed by the Financial Institutions and
Consumer Credit Subcommittee during a hearing on February 8 along with
other proposals to make the CFPB more accountable.
