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“Unlike every other department and agency within the federal government, the CFPB is not funded via congressional appropriations. Instead, its funding flows directly from the Federal Reserve. Each year, the White House submits a budget to the Federal Reserve, and the central bank hands over the necessary amount—$729.4 million last year, in case you were wondering.

For a long time after the CFPB was created in 2010, there were serious questions about the constitutionality of that structure. That finally got resolved last year, when the Supreme Court ruled that Congress was within its powers to hand off the purse strings. So, funding the CFPB via the Federal Reserve is not unconstitutional—it’s just unorthodox and foolish.

Here’s where the hubris enters the story. When Warren and Obama created the CFPB, they designed that unorthodox funding structure specifically to prevent a future Republican-led Congress from trying to defund the bureau. Remember, this was in the age when Republicans were running around the country telling voters they intended to repeal Obamacare too. By isolating the CFPB from Congress’ budgetary powers, Warren was trying to make it invulnerable to attack.

Instead, she simply gave it a fatal flaw.

Earlier this week, the Trump administration submitted its CFPB funding request to the Federal Reserve. It asked for…$0.

“Pursuant to the Consumer Financial Protection Act, I have notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not ‘reasonably necessary’ to carry out its duties,” wrote Russ Vought, director of the White House’s Office of Management and Budget (OMB), wrote on X on Saturday night. “The Bureau’s current balance of $711.6 million is in fact excessive in the current fiscal environment. This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”

That appears to be the end of the CFPB, at least until a Democrat returns to the White House. Trump will need an act of Congress if he seriously wants to abolish the Department of Education, for example, and even minor spending cuts being made across the executive branch will eventually need congressional or legal consent to be permanent. But there should be no serious questions about whether the president can unilaterally defund the CFBP. Congress has no role to play in that fight.”

https://reason.com/2025/02/13/elizabeth-warrens-hubris-allowed-trump-to-defund-the-cfpb/