Watchdog: Accountability

CFPB's spending skyrockets nearly 50 percent

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Spending at the Consumer Financial Protection Bureau went up nearly 50 percent from 2012 to last year, according to the latest audited financial statement for the bureau's parent agency, the Federal Reserve.

The balance sheet, published last week by the Fed's board of governors, may do little to quash concerns of critics and some in Congress that the agency needs tighter controls on its spending and additional oversight by those on Capitol Hill.

The financial statement, which was audited by the Washington office of Deloitte & Touche, shows that in the budget year ending Dec. 31, total spending for the CFPB increased from $385 million in 2012 to $563 million, a 46 percent hike.

One of the major expenses for the bureau in fiscal 2013 was $145 million paid toward the costs of renovating a building near the White House for use as the CFPB's headquarters, the agency said in its 2013 financial statements.

The bureau was created by the Dodd-Frank Act in 2011 in the wake of the 2008 financial crisis. Its aim is to promote "fairness and transparency" for consumers in mortgages, credit cards, student loans and other types of consumer credit.

But its rapidly rising expenditures contrasted with overall discretionary federal spending, which, according to the White House's Office of Management and Budget, declined slightly during the same period from $1.19 trillion to $1.14 trillion.

Under the Dodd-Frank law, Congress has no authority over the CFPB's budget, as the bureau is part of the Fed, which is independent of the remainder of the government. The law set the bureau's funding as a percentage of the Fed's operating expenses -- initially 10 percent of Fed expenses in fiscal 2011, and rising each year to 12 percent for fiscal 2014 and beyond.

In fiscal 2013, the cap would have equaled $598 million. That year, the bureau asked for, and received, $518.4 million from the Fed, according to its financial statement for that year. The CFPB also collected nearly $50 million in civil penalties in 2013.

One leading critic, Rep. Jeb Hensarling, the Texas Republican who is chairman of the House Financial Services Committee, has called the CFPB β€œ[f]undamentally unaccountable to Congress because the bureau's funding is not subject to" the Congressional appropriations process.

The Republican-led House voted 232-182 last month to approve a bill that would bring the bureau's budget under congressional control, with 10 Democrats crossing party lines to vote in favor. The bill now goes to the Democratic-led Senate, where its chances are considered dim.

Congressional critics have also questioned the necessity of, and expenses for, renovation of the building at 1700 G St. NW in Washington, D.C., for use as the CFPB's headquarters.

Sen. Elizabeth Warren, D-Mass., was a Department of the Treasury political appointee under President Obama when she laid the groundwork for the creation of the CFPB in 2009-10. She later defended exempting the bureau's budget from congressional oversight.

β€œThe Dodd-Frank Act followed more than a century of precedent in providing the CFPB with funding outside of the congressional appropriations process,” Warren told Hensarling's committee in 2011.

"Congress has consistently provided for independent funding for bank supervisors to allow for long-term planning and the execution of complex initiatives and to ensure that banks are examined regularly and thoroughly for both safety and soundness and compliance with the law," she said.

Warren also noted, "Although Congress provided the CFPB with a source of funding outside the appropriations process, the consumer bureau is nonetheless the only bank supervisor with a statutory cap on its primary source of funding. If the statutory cap is too low, the CFPB is required to seek an additional appropriation from Congress β€” unlike other banking regulators."

Correction: Federal discretionary spending for fiscal 2012 was $1.19 trillion, according to the Office of Management and Budget. The Washington Examiner regrets the error. This story was updated at 10:30 a.m. on March 17 to reflect the accurate figure. 

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