Trump uses Obama era funding tactic to defund CFPB

February 13, 2025 – President Donald J. Trump (R) cuts funding for the CFPB saving taxpayers over $700 million dollars a year moving forward.

In 2010 President Barack H Obama (D) and U.S. Senator Elizabeth Warren (D-Massachusetts) created the controversial Consumer Finance Protection Bureau (CFPB) as part of the Democrats Dodd-Frank financial reform legislation following the 2010 Great Rection.

Fearful that the Republicans would regain control of Congress, Warren and Obama crafted their financial reform legislation in such a way that forever more the CFPB would be exempted from the ordinary budget process. Instead of constitutional checks and balances the White House requests that the Federal Reserve right out a check to fund the agency. This prevents a Republican controlled Congress from cutting the agencies budget.

Republican Senators – particularly then Senator Richard Shelby (R-Alabama) – objected to this complete independence from Congress and the normal constitutional checks and balances.

Sen. Shelby wrote then: "For years I have argued that supporters of Dodd-Frank sacrificed our Constitution in the name of bureaucratic independence." ""That is why it is critical for the Bureau to be subject to the congressional appropriations process and governed by a board of directors. Only then will Congress have the ability to conduct meaningful oversight to ensure that the CFPB is truly accountable."

https://www.alreporter.com/2016/10/12/shelby-says-consumer-financial-protection-bureau-should-be-subject-to-congressional-appropriations-process/

Warren and Obama were able to eliminate congressional oversight for the CFPB; but they did not figure on Donald J. Trump (R).

Since the CFPB is not funded by direct appropriations instead of congressional appropriations the Federal Reserve cuts a check to the CFPB equal to whatever the President requests. Last year Biden ordered the Federal Reserve to give the CFPB $729.4 million. This week President Trump requested that the Federal Reserve give the CFPB $0.00.

Congress was powerless to cut its budget, powerless to direct its activities, and now Congress is powerless to save the CFPB as the bloated agency is now going through it's death throes.

Russ Vought is the director of the Trump White House's Office of Management and Budget (OMB).

"Pursuant to the Consumer Financial Protection Act, I have notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not 'reasonably necessary' to carry out its duties," Vought wrote on X Saturday night. "The Bureau's current balance of $711.6 million is in fact excessive in the current fiscal environment. This spigot, long contributing to CFPB's unaccountability, is now being turned off."

CFPB's functions will now be handled by, the U.S. Treasury (which regulates financial institutions), the Federal Deposit Insurance Corporation (which regulates banks), and various other state and federal entities.

The CFPB's employees should start looking for other employment. Reportedly probationary employees are all being let go.

"Effective immediately, unless expressly approved by the Acting Director or required by law, all employees, contractors and other personnel of the bureau shall ... cease all supervision and examination activity," Vought, the acting director of the agency, wrote late Saturday in an email.

"CFPB RIP," Elon Musk – the head of DOGE - posted on his X social media account.

(Original reporting by the UPI, CNN, and the New York Times contributed to this report.)

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