CFPB Budget Cuts Could Impact Debt Protection Abilities

The Consumer Financial Protection Bureau (CFPB) has only been in existence for seven years, but in that time it has taken many important steps to protect consumers from unfair debt collection practices and deceptive debt collection tactics. However, according to a recent report from NPR, “the Trump administration is proposing to dramatically cut funding” for the CFPB, which could ultimately prevent the Bureau from doing what it needs to do. The CFPB was created just after the financial crisis by Elizabeth Warren and others during the Obama administration. While the effects of the financial crisis largely have subsided, there is still a pressing need for the CFPB.
What would budget cuts do to the CFPB, and how could such cuts endanger consumers in need of protection?
Proposed $150 Million Cut to CFPB Funding
The proposed funding cut is not a small one. To be sure, the White House has proposed, in effect, gutting funding for the CFPB by cutting approximately $150 million from its budget. To put that figure in perspective, $150 million represents about 25% of the CFPB’s total budget. As such, a funding cut like this “would mean massive layoffs and disruptions,” according to Mike Calhoun, who is the president of the Center for Responsible Lending. In other words, the CFPB would no longer be able to do its job.
According to Calhoun, up to this point, the CFPB has been doing its job quite well. The Center for Responsible Lending and other organizations contend that “the agency has been paying for itself many times over.” Since its inception, the CFPB has provided more than $12 billion in consumer relief after consumers “were treated illegally by financial companies.” As such, “the CFPB is returning far more money to taxpayers than it’s costing them.” However, critics of the agency now are largely in charge of its present and future.
Funding Cuts Coupled with Regulatory Shifts
The proposed funding cuts to the CFPB look even worse when it comes to the future of consumer protection when those cuts are considered in relation to other regulatory shifts. As we have discussed previously, the CFPB recently put on hold a regulation that would have changed the ways that payday lenders can treat consumers. That regulatory change would have prevented payday lenders from charging predatory interest rates to consumers.
Is there any chance that CFPB funding will be preserved? The Federal Reserve provides the funding for the CFPB. There is a possibility that, if the Trump administration does in fact cut the budget significantly, that Congress could act to block that budget cut. Given that “polls show that the CFPB is popular with voters of both parties,” there is a possibility that “Republicans might join Democrats to protect the agency.”
Seek Advice from an Oak Park Consumer Protection Attorney
The CFPB is designed to protect consumers. However, an experienced Oak Park consumer protection lawyer can also help with your case. If you have questions about the Fair Debt Collection Practices Act (FDCPA) or other laws that may provide you with protection from predatory lending or deceptive debt collection practices, we can help. Contact the Emerson Law Firm today for more information.
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