Views from Washington’s Consumer Financial Protection Bureau Headquarters.
Saul Roeve | AFP | Getty Images
The massive tax and spending laws signed by President Donald Trump last week will significantly cut the annual budget for the Consumer Financial Protection Agency. And critics of the move say they fear that financial companies are under-supervised and that they will cause more harm to consumers.
“There’s no way to draw a positive picture about that,” said Adam Russ, director of financial services for the Consumer Federation, a consumer advocacy group.
The CFPB was created in the wake of the 2008 financial crisis and served as a single institution police the financial ecosystem for consumer harm that was previously scattered across multiple regulators.
Watchdog oversees banks, payday lenders, credit departments, debt collectors, student loan servicers, private student lenders and other financial companies.
“Half David” vs. Goliath
Unlike most federal agencies, the CFPB budget is not provided by Congressional budgets. Structure – The constitutionality, upheld last year by the Supreme Court, was intended to separate it from politics.
Instead, the CFPB is funded through the Federal Reserve.
CFPB’s annual funding for fiscal year 2025 is limited to 12% of the Federal Reserve operating expenses. This fixed percentage has been in place since 2013.
The so-called big beautiful bill that Trump signed into law on July 4th has nearly halved its cap and reduced it to 6.5%.
Activists attended a rally outside the Consumer Financial Protection Agency on March 24, 2025 in Washington. Activists held a rally to support federal workers affected by Doge Cuts.
Alex Wong | Getty Images News | Getty Images
According to Congressional Research Services, the CFPB’s funding limit, which is adjusted annually for inflation, is $823 million for fiscal year 2025, ending September 30th. (This rose from $598 million in 2013.
With a 6.5% cap, CFPB’s funding was the largest this year at $446 million, a cut of about 46%.
More details from personal finance:
Tax Changes Based on Trump Bill – 1 Chart
Trump Bill won’t rule out taxes on social security benefits
What may Trump Bill’s contribution tax mean for your university’s tuition fees?
Chi Chi Wu, director of consumer reporting and data advocacy at the National Center for Consumer Law, said slimmer budgets are likely to mean a major challenge for policing financial companies, particularly large institutions.
“It takes a lot of resources to chase a big dog,” Wu said.
“It was already David and Goliath,” she said. “This makes the situation worse. Now you have half of David.”
CFPB did not reply to requests for comment.
Same watchdog duty, less money
CFPB has three main features, Wu says: Supervise a financial company (like a bank examiner, but with a consumer protection mission). Protect consumer complaints.
As of December 3, the agency has recovered $21 billion in relief to more than 25 million consumers since its inception, according to CFPB data.
During that time, it imposed more than $5 billion in penalties on financial companies and protected complaints from around 7 million consumers, most of which were related to credit reporting.
Eamon Moran, a financial services lawyer and former CFPB lawyer for the law firm Dutch & Knight during the Obama administration, said:
Senate Republicans initially tried to cut the CFPB budget to zero, but the Senators deemed it a violation of the room rules.
Sen. Tim Scott, chairman of the Senate Bank, Housing and Urban Affairs Committee, said in a June 26 statement that reducing the CFPB’s budget cap would help “reduce waste and duplication of financial regulations” without affecting “legal function.”
Rust, the American Consumer Federation, questioned whether the CFPB could meet its core functions in a “weakened state.”
There may not be much difference under Trump
CFPB officials have never made the most of annual spending restrictions, but fundraising is generally waning and waning with changing leadership, wrote June 16.
For example, the biggest shortfall was $282 million during 2018, during Trump’s first term in 2018, but the lowest was $30 million in 2023 under former President Joe Biden, the CRS said.
Some experts say they believe that a drop in funding may not be important in Trump’s second term.
“In my view, it’s not a prominent starting point from what I’ve seen since the end of January,” Moran said.
For example, deputy of CFPB director Russell Vert proposed between 1,700 and 200 cut staff.
The move is currently weighing in federal courts. The Supreme Court on Tuesday allowed the Trump administration to move forward with a massive cross-government layoff, but said the High Court had not expressed a legal opinion on the reduction of certain agencies. It is unclear what this means for the CFPB case.
“People don’t expect to see each major regulation coming out of the CFPB over the next few years,” Moran said.
But funding could become more important during future management, experts said.
“This is a cut in funding for over three and a half years,” Wu said.
