Senate Dems introduce bill to fully restore CFPB funding

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• Key insight: The bill is largely symbolic since it has little chance of passing the Senate. But it signals what Democrats have in store if they are successful in the midterm elections. 
• What’s at stake: The legislation aims to immunize the agency from future partisan attacks. The CFPB’s funding was slashed in half last year by the Republican-led Congress.
• Forward look: The bill mandates a funding floor and makes the transfer of funds to the CFPB from the Federal Reserve System compulsory and automatic. 

The 11 Democrats on the Senate Banking Committee, led by Ranking Member Sen. Elizabeth Warren, introduced legislation to restore funding to the Consumer Financial Protection Bureau. 

The bill introduced Thursday aims to block any future administration from dismantling the consumer watchdog by starving it of funds. 

Last year, Republicans slashed the CFPB’s budget in half as part of a sprawling budget bill that narrowly passed the Senate, 51-50, along party lines. Under President Trump’s “big, beautiful bill”, Republicans capped the CFPB’s funding at $446 million in fiscal 2025, down from $785.4 million in fiscal 2024. The bulk of the bureau’s budget pays for employee salaries. A longtime goal of the CFPB’s opponents is to subject the agency to congressional appropriations. 

Technically, Congress last year lowered the amount that the CFPB can draw from the Federal Reserve System to 6.5% of the Fed’s total operating expenses, from the 12% that was mandated by Congress in the Dodd-Frank Act of 2010. 

The Democrats’ new legislation is surgically precise. It would dictate that transfers to the CFPB “shall not be less than 12%” of the Fed’s total operating expenses, or what is “reasonably necessary to carry out the authority of the Bureau under Federal consumer financial law.”

The bill mandates a funding floor and makes the transfer compulsory and automatic. It is an effort to eliminate challenges after accusations by consumer groups last year that Republicans had “invented legal theories” that they used to question the CFPB’s constitutionality and sideline enforcement and supervision of financial firms.

“By locking in a 12% funding floor and making disbursements mandatory, this bill ensures that invented legal theories cannot sideline the CFPB from protecting people from financial predators,” said Adam Rust, director of financial services for the Consumer Federation of America.

Still, the bill is largely symbolic. It has little chance of passing the Senate. But it signals what Democrats have in store if they are successful at winning back the House, and potentially the Senate, in the midterm elections. 

Last year, Russell Vought, the CFPB’s acting director, refused to request any funding for the bureau. But in January, he capitulated after a judge’s order would have held him in contempt if he failed to fund the agency. 

Vought’s refusal to request funding for the CFPB was part of a novel legal theory pushed by Republican critics of the bureau: that the Fed was unprofitable and, therefore, could not fund the agency. In December, three nonprofit groups led by Rise Economy, sued the bureau claiming they would suffer “imminent harm” if the CFPB was defunded.

In March, a federal judge issued a scathing rebuke of Vought, who also heads the Office of Management and Budget, ruling that he unlawfully refused to seek funding for the bureau. U.S. District Judge Edward J. Davila, of the Northern District of California, ruled that Vought’s refusal to request funding from the Federal Reserve Board last year was unlawful under the Administrative Procedure Act. Further, the judge ruled that Vought had unlawfully relied on a memo from the Department of Justice’s Office of Legal Counsel to claim the Federal Reserve lacked “combined earnings” to fund the CFPB.

The move by Democrats to codify funding in legislation is a response to what Warren described as “an assault” on the agency. 

“Donald Trump and his administration launched an assault on the Consumer Financial Protection Bureau, trying to drain it of its resources so it could no longer stop big banks and giant corporations from scamming Americans out of their money,” the Massachusetts senator said in a press release. “Democrats are united in fully-funding the CFPB when we take back Congress.”

The Democratic bill itself is just over 100 words. It would amend the Consumer Financial Protection Act of 2010 by setting a funding floor for the agency.

For years, the CFPB has been a lightning rod for partisan friction, with Republicans introducing dozens of bills aimed at changing the agency’s funding structure, turning it into a commission, and weakening its powers.

The Democrats on the Senate Banking Committee who co-signed the bill with Warren are Sens. Jack Reed, D-R.I., Mark Warner, D-Va., Chris Van Hollen, D-Md., Catherine Cortez Masto, D-Nev., Tina Smith, D-Minn., Raphael Warnock, D-Ga., Andy Kim, D-N.J., Ruben Gallego, D-Ariz., Lisa Blunt Rochester, D-Delaware, and Angela Alsobrooks, D-Md.