February 16th, 2011
RE: Opposition to proposed cuts to CFPB funding under the proposed CR; the Consumer Financial Protection Bureau is a very good value
Dear Member of Congress:
On behalf of Americans for Financial Reform, a coalition of more than 250 national, state and local organizations, and its other undersigned member organizations, we write in strong opposition to the funding cuts for the new Consumer Financial Protection Bureau (CFPB), as proposed in a controversial provision (Section 1517) in the Continuing Resolution to be considered on the House floor today. If amendments are offered to restore funding to the CFPB we urge you to support them. Also, oppose any amendments, such as #528 (Carter) or #577 (Price), that would further weaken the CFPB.
The controversial provision included in the CR would effectively cut the new CFPB’s budget by 40 percent – from $143 million to $80 million — before it even takes over its job of protecting American consumers from unfair financial practices.
These proposed cuts would not subtract a dime from the deficit. They would take money designated to protect American consumers from financial fraud and leave it instead it with the already well-funded Federal Reserve system.
That’s because the CFPB’s budget is a transfer from the Federal Reserve Board, not an appropriation. The attempt at cuts to the non-appropriated budget of a bank supervisory agency is unacceptable; no other federal bank regulators have their budgets manipulated in this way. In fact, while the CFPB’s proposed Federal Reserve transfer this year of $143 million is well under its proposed cap of approximately $500 million to be needed once it is fully staffed, it remains the only bank supervisor with a capped budget. Not only is the CFPB the first federal agency with only one job, protecting consumers in the financial marketplace, its funding status as enacted in the Wall Street Reform and Consumer Protection Act of 2010 is a very good value and already a compromise since it is capped.
Cutting its budget would prevent it from examining the biggest banks for further violations of overdraft, credit card and mortgage rules that they have become known for. This would harm consumers. Cutting its budget would make it harder for consumers who have been slammed by these same unfair practices from participating in the economic recovery. Cutting its budget would also harm small businesses, who have not been served well by those big banks that would benefit most from a CFPB budget cut.
And finally, cutting the CFPB’s budget means a return to the system of inadequate financial supervision that failed taxpayers, depositors, investors, homeowners and other consumers. Allowing continued predatory lending to consumers will inject greater risk into the financial system. That will raise the threat of a repeat of the Wall Street-caused financial crisis that cost Americans millions of lost jobs, billions of dollars in taxpayer funded bailouts and trillions of dollars in lost home values and retirement savings.
We encourage you to support any amendments that may be offered on the House floor to restore funding to the CFPB. With the economy still fragile, this is no time to further undercut consumer confidence by defunding a federal agency consumers will need to rely on to ensure that their interests are protected. After the worst economic crisis since the Great Crash of 1929, consumers need a full-sized cop on the beat.
Sincerely,
Americans for Financial Reform