Budget Time But Will The CFBP Be Touched?

The Super Bowl is over; in Egypt the street cleaners are out in force; the rest of the Middle East is smoldering; Iraq and Afghanistan are relatively quiet for the moment; and credit card debt jogged up a bit more in January than expected while defaults dropped. In other words, the news cycle is wide open, which can only mean that its budget time! Ahh, yes, the wonderful week long buffet of pundits and politicians talking all money all the time (Google is showing 71 news articles available in real time right now).

Of course, one of the main topics of any "cut" conversation is the Dodd-Frank Act and the House majority's intent to preclude implementation-related spending, which Bloomberg reports could reach as high as $6.5 billion.

Much of this cut-related clamour is fairly focused on Dodd-Frank provisions that extend beyond consumer finance regulation. However, it is fair to say that the Consumer Finance Protection Bureau is in the cross-hairs...or is that really even possible? Current estimates are that the 2011-12 budget for the Bureau will be around $450 billion (give or take $50 billion), which is calculated as a set 10% of the Federal Reserve operating budget. That means the CFPB's budget is likely beyond direct Congressional control, except that Dodd-Frank does contain a provision allowing for the CFPB to request a couple hundred million more from Congress in budget appropriations starting in 2013 (so the House could whack those requests, assuming that the party in control doesn't change in 2012). The CFPB's allotted percentage is set to increase to 13% in fiscal year 2013, by which time the1,225 "new" hires at CFPB should be in place and working to propound, investigate and enforce a new world of rules and regulations. And, yes, this budget dwarfs other consumer protection-related budgets such as those enjoyed by the FCC and SEC, but then the CFPB assumes responsibility for regulating, investigating and enforcement for several existing federal agencies, including the FDIC, FCC, OCC, HUD and other reasonably important agencies.

What is interesting is this: As with several of the most important hires to date, many, if not most, of the rank and file at the CFPB will undoubtedly be moving over from existing posts at existing agencies whose consumer protection responsibilities will be assumed. Many of those agencies, such as the SEC and FDIC are clearly affected by other Dodd-Frank provisions, but we have not seen word one about any offset associated with the fact that so many at the CFPB will not really be "new" federal hires. In fact, at this point it is a bit unclear just how "new" the Bureau will be when juxtaposed against its amalgamative characteristics. Curious.