Trump Signs Law Halving CFPB Budget Cap

President Donald Trump signed the One Big Beautiful Bill Act on July 4, 2025, which significantly reduces the Consumer Financial Protection Bureau's (CFPB) funding cap from 12% to 6.5% of the Federal Reserve's 2009 operating expenses, nearly halving its budget. This cut, roughly a 46% reduction, lowers the CFPB's maximum funding to about $446 million for the fiscal year, down from $823 million. Republicans, including Senate Banking Committee Chairman Tim Scott, argue the reduction promotes fiscal responsibility and curbs the CFPB's unchecked power, claiming it will save taxpayers over $2 billion. Conversely, Democrats like Sen. Elizabeth Warren warn that the funding cut threatens consumer protections by weakening oversight of financial institutions, potentially leaving consumers vulnerable to predatory practices. The CFPB, established by the Dodd-Frank Act to regulate financial firms and protect consumers, is currently under investigation by federal watchdogs, raising concerns about its ability to fulfill statutory obligations amid budget constraints. While the bill preserves the CFPB's ability to request additional funds from Congress, uncertainty remains about the agency's future operational capacity and effectiveness.