Taking Account of Bureaucrats’ Spending (TABS) Act would change consumer watchdog agency funding from the Fed to Congress
Who should control the purse strings for one of the main agencies set up after the 2008 financial crash?
Context
Created in response to the financial crisis of 2008–09, the Consumer Financial Protection Bureau (CFPB) is a relatively new government watchdog agency. Through 2020, they’ve brought 284 enforcement actions which returned $12.9 billion to consumers. Critics contend the bureau, even if well-intentioned, is too overzealous to the point of being anti-business.
Unlike most components of the federal government, which are funded directly by Congress, CFPB was set up to be funded independently by the Federal Reserve, so long as they don’t exceed a statutory cap. Opponents say the bureau exerts considerable control over the economy with little to no accountability, and by making its funding contingent on taxpayers, more accountability would be created.
What the bill does
The Taking Account of Bureaucrats’ Spending (TABS) Act would put Congress in charge of funding the CFPB.
It was introduced in the House on February 4 as H.R 790, by Rep. Andy Barr (R-KY6).
What supporters say
Supporters argue that an agency in charge of protecting “the people” should be overseen by the politicians that those same people voted to represent them, not an unelected and unaccountable body like the Federal Reserve.
“The Bureau deserves the same scrutiny and the same checks and balances as any other federal agency,” Rep. Barr said in a press release. “Congressional oversight and accountability will ensure that the Bureau stays true to its mission of consumer protection, and avoids politically motivated overreaches, wasteful spending, and unnecessary regulations.”
What opponents say
Opponents counter that a budget free from Congress is one of the best methods to ensure that the bureau does what its name ostensibly demands: protect consumer finance.
“Budgetary independence is a key element of financial regulatory independence, providing additional freedom to make difficult regulatory decisions,” wrote Brookings Institution senior fellow in economic studies Aaron Klein.
“This principle was evident during the run-up to the financial crisis, when the former regulator of Fannie Mae and Freddie Mac was regularly pressured through Congressional appropriations to take it easier on these housing finance companies,” Klein continued. “Congress wisely created funding autonomy when it established the new Federal Housing Finance Agency (FHFA) with strong bipartisan support under President George W. Bush.”
Odds of passage
Rep. Barr’s 2016 version attracted 50 cosponsors, all Republicans, but never received a vote despite Republicans controlling the chamber at the time. His 2017 version attracted a smaller 34 Republican cosponsors, but also never received a vote. His 2019 version attracted a larger 42 Republican cosponsors, but Democrats controlled the House then.
His current version has attracted a smallest-yet 25 Republican cosponsors. It awaits a potential vote in the House Financial Services Committee. Odds of passage are low in the Democratic-controlled chamber. The irony here is that Rep. Barr probably wouldn’t want his own bill to be passed now, since it would put the CFPB’s budget entirely under Democratic control.
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This article was written by GovTrack Insider staff writer Jesse Rifkin.
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