Consumer Finance Insights
May 4, 2015

Advisory Boards and a Funding Cap, Congress Turns its Eyes to the CFPB

Last week, the U.S. House of Representatives passed a Bill that would both more permanently install two advisory boards for the CFPB and cap the Bureau’s future funding. Principally, HR 1195—the Bureau of Consumer Financial Protection Advisory Board Act—would force the Director to create three advisory boards—the Community Bank Advisory Board (CBAB), the Credit Union Advisory Board (CUAB) and the Small Business Advisory Board (SBAB)—to work with the CFPB. Both the CBAB and the CUAB already exist, having been created by the CFPB in 2012 and renewed in January 2015. As their names suggest, these advisory boards serve to advise the CFPB on issues related to community banks (depository institutions with total assets of $10 billion or less) and credit unions. Because the CFPB does not have regulatory oversight over community banks and credit unions, the CFPB created CBAB and CUAB to serve as conduits so that these institutions can weigh in on consumer issues before the Bureau. Since these boards currently exist pursuant to the Director’s regulatory authority, they are subject to the Director’s discretion. HR 1195 would remove the Director’s discretion to continue or cancel these advisory boards.

The SBAB would be a new advisory board for the CFPB. As described in HR 1195, the SBAB would “advise and consult with the Bureau in the exercise of the Bureau’s functions under the Federal consumer financial laws applicable to eligible financial products or services.” HB 1195 § 2(a)(1)(A). Additionally, the SBAB would “provide information on emerging practices of small business concerns that provide eligible financial products or services, including regional trends, concerns, and other relevant information.” HB 1195 § 2(a)(1)(B). In essence, SBAB would provide yet another conduit for a group not specifically subject to the CFPB’s regulatory authority.

Before voting on the Bill, the House amended it to cap the CFPB’s funding beginning in 2020. The Amendment would prohibit the Director from requesting funding in excess of $655,000,000 for fiscal year 2020 and $720,000,000 for fiscal year 2025. Although these numbers fall far short of a complete defunding, representatives opposing the cap suggest that it would significantly limit the Bureau’s budget. For example, Rep. Maxine Waters, estimated that the cap would result in a $45 million budget cut over the next five years and a $100 million budget cut over the next ten years. The White House has indicated that it may veto the Bill if passed by the Senate with the amendment. HR 1195 is currently being discussed by the Senate Committee on Banking, Housing, and Urban Affairs.