Image by Department of Agriculture via Flickr Creative Commons https://www.flickr.com/photos/usdagov/
The grotesque and unconstitutional Consumer Financial Protection Bureau (CFPB) has the most unique budgeting process in the federal government (I use that term loosely because the way the CFPB is organized makes it clear that it is some sort of fourth branch of government). Where other agencies have to make a budget submission to Congress, participate in an oversight hearing, and have Congress appropriate money, the CFPB simply tells the Fed to send it a specified amount of money and the Fed complies.
Under the Dodd-Frank law, the CFPB gets its money from transfers from the Federal Reserve System, up to specific caps set by the law. The Fed can’t turn down requests under that cap.
The caps are fixed percentages of the Fed’s operating expenses, which works out to the following:
–10% of Fed operating expenses in fiscal 2011 or $498 million — 11% of Fed operating expenses in fiscal 2012 or $547.8 million — 12% in fiscal 2013 or $597.6 million
–12% each fiscal year thereafter, subject to annual adjustments for inflation
If the CFPB thinks it needs more money it can ask for an extra $200 million through fiscal 2014, but the CFPB says it won’t.
The CFPB also was allowed to keep unspent money, in some sort of contingency fund, rather than returning it to the Treasury. This, in any other agency, would be known by its technical term: “felony.” So not only is the CFPB financed off-book and is impervious to questions about its expenditures, it is actually allowed to build up its own reserve fund and spend that fund without oversight.
With budget hawk Mick Mulvaney serving as acting director, a new day is dawning:
Every quarter, the Consumer Financial Protection Bureau formally requests its operating funds from the Federal Reserve. Last quarter, former director Richard Cordray asked for $217.1 million. Cordray, an appointee of President Barack Obama, needed just $86.6 million the quarter before that. And yesterday, President Donald Trump’s acting CFPB director, Mick Mulvaney, sent his first request to the Fed.
He requested zero.
In a letter to Fed chair Janet Yellen obtained by POLITICO, Mulvaney wrote that the bureau already has $177 million in the bank, enough to cover the $145 million the bureau has budgeted for its second quarter. Cordray had maintained a “reserve fund” in case of overruns or emergencies, but Mulvaney said he didn’t see any reason for it, since the Fed has always given the bureau the money it needs. Mulvaney, who is also Trump’s budget director, noted that instead of advancing the funds to the bureau, the Fed could return them to the Treasury and reduce the deficit.
“While this approximately $145 million may not make much of a dent in the deficit, the men and women at the Bureau are proud to do their part to be responsible stewards of taxpayer dollars,” Mulvaney wrote.
In a sane environment where we weren’t obsessing about President Trump’s height and weight (and accusing an active duty admiral of lying about what he found on Trump’s medical exam) and arguing about Sh**hole-Gate, Mulvaney requesting zero dollars would be front page news. And it should be front page news.
Mulvaney’s efforts to rein in an illegally conceived and out-of-control agency deserves some praise.