What does the Consumer Financial Protection Bureau—the federal watchdog agency created in response to the financial crisis—cost to run, and what has that expenditure yielded? Those questions are prompted by the recent actions of its acting director, Mick Mulvaney.
Under his leadership, Mulvaney has described the bureau as “an awful example of a bureaucracy gone wrong” and recently made headlines by requesting zero dollars from the Federal Reserve for the CFPB’s second-quarter budget, explaining that its operations—estimated to total $145 million for the quarter—will instead be funded by its reserve funds of $177 million.
Given the attention to the CFPB and its budget, ValuePenguin analyzed what the bureau has in fact cost to run since its inception in 2010, and what that investment has reaped, primarily by returning funds to consumers from banking institutions. We’ve found that for every $1 the Federal Reserve has transferred since 2010, the CFPB has delivered $3.69 to consumers in monetary compensation, principal reductions, cancelled debts and other consumer relief from its supervisory and enforcement actions over that same period. That’s nearly a 400% return.
The CFPB estimated that 29 million consumers received some kind of relief from its efforts, totaling $11.90 billion as of mid-2017. By contrast, the bureau has requested only $3.23 billion from the Federal Reserve since 2010 for its budget.
But Mulvaney’s focus, at least in his statements, has been less on those returns than on the burden he feels the agency has imposed on the institutions it regulates. He has called for an in-depth review of the CFPB’s functions and made “identifying and addressing outdated, unnecessary, or unduly burdensome regulations” part of the CFPB’s mission statement. In addition, he dropped a lawsuit against payday lenders accused of predatory practices and delayed by a year the implementation of consumer protections on prepaid debit cards.
The CFPB receives its funding from the Federal Reserve and not through congressional appropriations in an effort to safeguard the bureau’s independence from politics. The Fed itself also doesn’t rely on taxpayer money and instead finances its operations from the interest earned on the securities it has acquired through open market operations as well as fees for providing banks with check clearing, funds transfers, and automated clearinghouse services.
Any net earnings from the Fed are transferred to the U.S. Treasury. As part of his budget announcement, Mulvaney requested that the savings from his zero-dollars request be remitted to the Treasury and said the CFPB’s staff are “proud to do their part to be responsible stewards of taxpayer dollars.”
Consumers can and should continue to avail themselves of the CFPB, even as the review of its mandate proceeds. The agency offers money advice for consumers on its website, such as retirement planning, student loans, buying a house and other financial scenarios or products. Consumers having difficulty resolving an issue with a bank, lender, or other financial institution can file a complaint with the CFPB, which will help facilitate a resolution.