On July 4, the "One Big Beautiful Bill Act," was signed into law, which includes a provision to reduce the cap on the CFPB's annual funding. The bill lowers the cap from 12% to 6.5% of the Federal Reserve's total operating expenses for the fiscal year 2009, adjusted each year for inflation.
The new law amends Section 1017 of the Dodd-Frank Act to reduce the ceiling on the CFPB budget requests and requires excess civil penalty funds—after redress to victims—to be transferred to the U.S. Treasury. The change sharply limits the Bureau's access to Fed funding and may affect staffing, supervision, and litigation posture going forward.
Putting It Into Practice: Amid rescinded guidance, planned staff reductions (previously discussed here and here), and now a steep funding cut, the CFPB is undergoing a fundamental retrenchment, signaling a shift away from the significant role it once played in oversight and enforcement. As the Bureau's regulatory powers continues to shrink, federal and state regulators are increasingly stepping in to fill the gaps in consumer financial oversight.
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