Writer: Lucy Lazarony
Editor: Lillian Guevara-Castro
Reviewer: Adam West
Our experts and industry insiders blog the latest news, studies and current events from inside the credit card industry. Our articles follow strict editorial guidelines.
Key Takeaways
- Following a court order, the acting director of the Consumer Financial Protection Bureau has requested $145 million from the Federal Reserve to fund the CFPB through at least the end of March.
- The Trump administration wants to close the CFPB, but a judge has ordered that the CFPB must continue to receive funding.
- Uncertainty or lack of funding at the CFPB may mean a slowdown of the agency’s regulatory duties regarding credit cards.
Acting Director Russell Vought has requested $145 million from the Federal Reserve in the latest move regarding funding for the Consumer Financial Protection Bureau.
The $145 million would allow the CFPB to stay open through at least March, the ABA Banking Journal reports. This request from Vought stems from a court order that told the Trump administration to continue funding the CFPB.
Vought said he doesn’t agree with the order even as he submitted the funding request.
Clashing Over Funding for the CFPB
Both President Trump and Vought have stated that they want to close the CFPB. In December, District Judge Amy Berman Jackson ruled that the CFPB must try to obtain funding, NPR reports.
In an earlier injunction, Jackson told the Trump administration to stop actions that would close down the CFPB, including staff layoffs. There is also a lawsuit to consider. In December, 21 states and the District of Columbia sued the Trump administration to prevent the administration from defunding the CFPB.
For now, thanks to Vought’s action, the CFPB has the funding it needs to continue.
How CFPB Funding Affects Credit Card Issuers
The CFPB enforces rules on credit cards in a number of areas, including practices regarding interest rates, credit card disclosures, late and penalty fees, billing disputes, and unfair or deceptive practices.
If the CFPB does not get additional funding beyond March, it may lead to a slow down of its regulatory capacity regarding credit cards. This could mean slower enforcement and making of rules and fewer compliance examinations.
Uncertainty around the CFPB’s future funding beyond March makes it more difficult for card issuers to plan and forecast risk.
The Bottom Line
The acting director of the CFPB has requested $145 million from the Federal Reserve. This request will keep the watchdog agency open at least through March. The CFPB offers oversight to credit card issuers and will continue to do so during this time period.
But it is uncertain what will happen this spring. If the CFPB fails to get enough funding, this could lead to a slow down in the making and enforcing of the rules regarding credit cards.
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