No Funding from The Fed for the CFPB

Published in The Wall Street Journal,

Chris Dodd and Barney Frank point out that the Consumer Financial Protection Bureau was brought into being by proper legislative action in 2010 ("Trump Harms Consumers by Weakening the CFPB," op-ed, March 13). They leave out, however, that the act was approved on a mostly party-line vote when the Democratic Party had majorities in both the House and Senate.

Perhaps knowing that their control was fleeting, the drafters attempted to restrict future Congresses from controlling the agency’s finances. They did so by stipulating that the CFPB would be funded out of the combined earnings of the Federal Reserve—at the time a safe bet, considering the central bank had been profitable for nearly 100 years. As long as that remained the case, lawmakers would be deprived of their essential power of appropriation.

But the Fed ceased to have any combined earnings in late 2022, and it has since racked up massive losses. So long as those persist, there are no earnings that can be used to fund the CFPB legally under the terms of the Dodd-Frank Act. When the CFPB now wants to ask for funding, it should have to go to the Congress and ask for appropriations—exactly as it should’ve been in the first place.

Alex J. Pollock
Mises Institute
Lake Forest, Ill.