Takeaways from Trump budget: CFPB reform, FHA fees and student loans

Takeaways from Trump budget: CFPB reform, FHA fees and student loans
Takeaways from Trump budget CFPB reform FHA fees and student loans

The president’s budget proposes subjecting the Consumer Financial Protection Bureau to the appropriations process.

The Dodd-Frank Act created the CFPB as an independent bureau of the Federal Reserve and established that it would be funded primarily through transfers from the Fed.

Republican lawmakers have sought to reform the CFPB’s funding every year since the bureau was created, in 2011, by proposing to add the agency to congressional appropriations. The president’s budget proposes much of the same. Yet it is unlikely that Congress — particularly the Democratic-controlled House — would enact such a measure.

“The Budget proposes legislation to restructure the CFPB. Restructuring is required to ensure appropriate congressional oversight and to refocus CFPB’s efforts on enforcing the law,” the budget stated. “The Budget proposes to limit CFPB’s mandatory funding in 2019 to allow for an efficient transition period and bring a newly streamlined agency into the regular discretionary appropriations process beginning in 2020.”

Still, it appears that the president’s budget for the CFPB is far more generous than the budget released in February by CFPB Director Kathy Kraninger. Trump’s budget calls $636 million in funding this year, compared with $533 million estimated by Kraninger.

Kraninger, a Trump appointee who has been in the job for two months, plans to slash the CFPB’s budget by roughly 4% this year and 9% in 2020.

The White House is also calling on Congress to establish funding levels for the Treasury Department’s Financial Stability Oversight Council and Office of Financial Research, which currently set their own budget levels.

Both entities have been funded through assessments on certain bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies supervised by the Federal Reserve.

“OFR and FSOC, established by the Dodd-Frank Act, are currently able to set their own budgets, which circumvents congressional approval and oversight,” the budget says. “Bringing OFR and FSOC into the congressional appropriations process is consistent with recommendations made in Treasury’s June 2017 report to the President on banks and credit unions.”

The budget acknowledges that the Office of Financial Research has already taken steps to further the goals of the 2017 Treasury report through a reorganization that has resulted in “significant reductions” in staffing and operational expenses.

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