Trump’s ‘Big Bill’ Slashes Consumer Watchdog CFPB’s Budget Nearly In Half

• ​New law cuts Consumer Financial Protection Bureau’s funding cap by 46%, saving $2 billion, Republicans say.
• GOP argues the CFPB has been unaccountable, while Democrats warn consumers will suffer without strong oversight.
• Funding cut could impact ongoing legal battles over efforts to reduce the agency’s size and power.

President Donald Trump’s sweeping budget bill delivers a significant blow to the Consumer Financial Protection Bureau (CFPB), cutting nearly half of its funding and intensifying a partisan clash over the agency’s future.

The legislation, signed on July 4, reduces the CFPB’s funding cap from a maximum of 12% of the Federal Reserve’s inflation-adjusted 2009 operating expenses to 6.5%. The cut amounts to a 46% decrease in the bureau’s funding ceiling and is projected to save $2 billion, according to Senate Republicans who pushed the measure.

“For the first time since the passage of Dodd-Frank, Congress is reining in the unaccountable Consumer Financial Protection Bureau and decreasing its mandatory funding cap by 46%, which will save over $2 billion and require the Bureau to be fiscally responsible,” said Senate Banking Committee Chairman Tim Scott (R-S.C.).

Consumer protection battle lines drawn

While Republicans hailed the cuts as a step toward accountability, Democrats condemned the move as a direct threat to consumer protections.

“The Consumer Financial Protection Bureau is the financial watchdog to keep people from getting cheated on credit cards, mortgages, Venmo, payday loans, and a zillion other transactions,” said Sen. Elizabeth Warren (D-Mass.), Ranking Democrat on the Banking Committee. “When this financial cop can’t do its job, there is no one else in the federal government to pick up the slack.”

The CFPB, established under the 2010 Dodd-Frank Act, is tasked with policing abuses in financial products and services. It has been a frequent target of Republicans, who argue the agency wields too much power and operates with insufficient oversight because its funding bypasses the congressional appropriations process.

Uncertainty over the agency’s future

The funding cuts come amid broader legal and political challenges facing the CFPB. Although the Supreme Court has upheld the CFPB’s funding structure as constitutional, debates persist over whether the Federal Reserve currently has sufficient “combined earnings” — the designated funding source under Dodd-Frank — especially since the Fed has reported losses since September 2022. No court has yet ruled definitively on that question.

Meanwhile, the Trump administration has been locked in a legal battle over its efforts to reduce the size of the CFPB. An injunction obtained by the National Treasury Employees Union has blocked plans to lay off a large portion of CFPB staff and cancel agency contracts. Legal experts speculate that the new funding restrictions could bolster the administration’s case for shrinking the bureau, as reported by Law360.

Originally, some Senate Republicans had proposed eliminating the CFPB’s independent funding entirely, dropping the cap to zero. However, the Senate Parliamentarian ruled that such a measure couldn’t be included in the budget bill. A House version would have capped 2025 CFPB funding at $249 million, but that provision did not survive the final bill.

The funding cut marks the most significant congressional action against the CFPB since its creation, leaving questions about how the bureau will operate with fewer resources — and how millions of American consumers might be affected.