Companion legislation has been introduced in the House of Representatives and the Senate that would block the Federal Reserve Board from funding the Consumer Financial Protection Bureau if the Fed incurs a loss on its balance sheet, meaning it could only provide funding to the Bureau if itself is making money.
The CFPB is not funded by Congress; its funding comes from allocations provided by the Federal Reserve. Funding the CFPB this way removed the Bureau from the Congressional appropriations process, a fact that has angered Republicans from the day the CFPB was born. Most federal agencies submit a budget proposal to Congress and Congress decides how much money the agencies should receive. That process provides Congress with oversight of those agencies, shaping their mandates and deciding for how long they can keep the lights on.
The Fed is “carrying hundreds of billions of dollars in unrealized losses that could swing to an operating loss soon, Rep. Hill said in a statement. Such a precarious financial situation for the Fed makes it “grossly irresponsible” to be funding the CFPB’s “radical and highly politicized agenda,” Rep. Hill said.
“The fact that the Federal Reserve can continue to send hundreds of millions of dollars to the CFPB — outside of the appropriations process — even when the Federal Reserve incurs significant losses should unnerve all Americans,” Sen. Hagerty said in a statement. “This couldn’t happen in the real world, and shouldn’t be allowed to happen at the Fed.”