U.S. Senator Katie Britt Questions Legality of Current CFPB Funding Structure

Raises concerns over quarterly ‘blank checks’ issued to CFPB in recent years

WASHINGTON, D.C. – U.S. Senator Katie Britt (R-Ala.) participated in a hearing of the Senate Committee on Banking, Housing, and Urban Affairs where she spoke with Federal Reserve Chairman Jay Powell at his “Semiannual Monetary Policy Report to the Congress.”

Senator Britt began by remarking on President Trump’s recent efforts, consistent with his campaign promises, to slash wasteful spending: “There’s been a lot of conversation both in and out of this hearing room today . . . about a ‘co-president,’ referencing Elon Musk, referencing the work that DOGE is doing. I think it’s important to remember that President Trump ran on this. He said we’re going to look for wasteful spending across our government.” She continued, “We’re $36 trillion in debt – that’s not only fiscally irresponsible, it is actually morally irresponsible. The difference in this administration and the last administration is that President Trump is actually the final arbiter.”

She continued by exposing Democrats’ double standard saying, “It’s interesting that none of you had anything to say over the last four years, when it is clear that our commander in chief was not in command. If we’re going to use the term co-president, then let’s go back and say co-president Jake Sullivan, co-president Ron Klain, or co-president Jill Biden. I mean, it seems that some of the biggest decisions were made during the president’s afternoon nap time. So, I just think we need to be a little bit more honest about what’s been laid out and what’s actually occurring,” Senator Britt stated.

Since Senator Britt took office, she has questioned bank regulators on various reckless rulemakings and has continued to highlight the proven strength of U.S. banks, importantly noting the risks these proposed concurrent rules have posed to Main Streets and the financial sector as a whole.

Senator Britt emphasized the need for greater accountability and transparency from the Federal Reserve’s supervisory function saying, “We unfortunately started 2023 with several bank failures, in which the Fed itself admits its supervisors were, ‘too slow to [act]’. . . Yet, in the aftermath of the failures, the Fed was certainly not slow to act when it came to new regulations like new capital requirements that would have put the U.S. banks at a global disadvantage and actually hurt consumers in my state.” 

She went on to say, “In addition to that, we had [the] Community Reinvestment Act and stress testing frameworks that were basically adopted in secret. Or, as we discussed last week, the reputational risk and just the arbitrary nature of that and those standards that were used to push political agendas. None of this is acceptable.”

Senator Britt then discussed the excessive fund transfers from the Federal Reserve to the Consumer Financial Protection Bureau (CFPB) and applauded the Trump Administration and Acting CFPB Director Russ Vought for introducing accountability back into the agency by immediately pausing these quarterly “blank checks.”

Since September 2022, the Biden Administration’s CFPB requested an average of $194,460,000 per quarter to fund the agency. Chair Powell confirmed to Senator Britt that “the Director of the CFPB requests money, and we, under the law, we send that money.” Powell also stated that the Federal Reserve is prohibited under Dodd Frank to review or amend these significant funding requests, giving full discretion to the CFPB Director.

Senator Britt questioned the legality of these payments given the Federal Reserve’s current net-operating loss of over $220 billion saying, “As of January 30, the Federal Reserve had a mark-to-market loss on its balance sheet of roughly $221 billion. In fact, I looked back and the Fed has posted losses since September of 2022. Meanwhile, we’ve seen transfers to the CFPB totaling $2 billion since September of 2022.” She added, “Congress specified in statute that the Fed shall fund the CFPB through the ‘combined earnings’ of the Federal Reserve System. However, as I mentioned, the Fed has no current earnings – it has a balance sheet of negative $200 billion.”

This line of questioning echoes Senator Britt’s calls for serious reform at the CFPB. In a hearing last fall, Senator Britt stated, “When you look at the way [the CFPB is] structured, you have one director, no board, no votes [on rules], and, really outside of our opportunity to ask you questions in this setting, no real Congressional oversight. When you have just a solo director with nearly unlimited leeway to push his own agenda, that’s where I have a real issue.”

In October of 2024, American Banker published a column written by Senator Britt warning of the increasing politicization and regulatory overreach at the CFPB. In the column, she argues Congress must act to rein in the CFPB’s excesses, including by subjecting the agency to meaningful Congressional oversight, to protect everyday Americans.

A video of Senator Britt’s full line of questioning can be viewed here.

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