Committee Follows Administration’s Lead by Dramatically Slashing CFPB Funding Needed to Protect Ordinary Folks Harmed by Lawbreakers
WASHINGTON – Today, the U.S. House Financial Services Committee (HFSC) voted on party lines to slash the Consumer Financial Protection Bureau’s (CFPB) funding by 70% and to effectively eliminate a penalty fund that provided over $1 billion to people, including servicemembers abroad, who were harmed by companies that went out of business or had no funds to compensate their victims. The “reconciliation” bill represents the latest attempt to eviscerate the CFPB, hobbling its ability to protect consumers when they are wronged by Wall Street banks and cheated on Big Tech payment apps.
“Slashing the CFPB’s funding by 70% is not about trimming waste – it is about killing the watchdog that makes Wall Street banks keep criminals out of your bank account, pushes credit bureaus to fix errors damaging our credit reports, and ensures that big tech companies like PayPal (and Elon Musk’s coming X Money) comply with privacy laws,” said Lauren Saunders, associate director of the National Consumer Law Center. “With a potential recession looming and tariffs threatening to push prices even higher, Republicans who voted to gut the CFPB are giving corporate cheats and predatory lenders free rein to charge junk fees and put struggling families into debt trap loans.”
The CFPB was created by Congress to fix problems that caused millions of families to lose their homes and jobs during the Great Recession. The CFPB saves homes, stops fraud that ruins lives, and enforces key laws, securing $21 billion in relief for over 200 million people harmed by credit bureaus, big banks, debt collectors and predatory lenders.
The broad support for the CFPB is illustrated by a letter from 349 consumer, civil rights, labor, legal services and community organizations and academics opposing bills like the current one that take away the ability to stand up for consumers, competition and a fair financial marketplace.
The House bill also effectively eliminates a civil penalty fund that has provided $1.2 billion to compensate people, including servicemembers serving abroad, harmed by shady companies that go bankrupt or abscond with funds. “To pay for tax cuts for billionaires, Republicans in Congress are grabbing money that has gone to servicemembers and working families when fly-by-night cheats violate the law and then disappear,” Saunders added.
The effort to slash the CFPB’s budget comes as the CFPB faces mounting attacks designed to stop its work to protect consumers. The Administration has twice attempted to fire a sizable portion of its staff, with the latest effort cutting as many as 1500 employees and leaving just 200 staff members behind. The firings were temporarily halted but the threat looms. The CFPB, under new leadership, has also dropped cases against payday lenders, ended oversight of Big Tech nonbanks, and revoked guidance that reminded debt collectors that they cannot legally collect medical debts not owed.
Related Resources
- Press release: CFPB Begins Firings and Ends Oversight of Nonbanks, Big Tech, and Critical Consumer Protection Areas, April 17, 2025
- Issue brief: Legislative Attacks on CFPB Erode Mandatory Funding, Compromise Independence, Weaken Integrity, and Roll-back Protections, Feb. 24, 2025
- Press release: Chase, Wells Fargo, Navy Fed Top Overdraft Fee Offenders List, April 3, 2025
- Press release: Nearly Every GOP Senator Votes to Saddle Struggling Families With Excessive Overdraft Fees, March 27, 2025
- Press release: Senate, CFPB Move to Weaken Fraud and Privacy Protections in Payment Apps and Digital Wallets, March 4, 2025
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