On April 22, the House of Representatives passed a bill requiring the Consumer Financial Protection Bureau to solicit input from several advisory boards and to cap the CFPB’s future funding.

H.R. 1195, the Bureau of Consumer Financial Protection Advisory Boards Act, was adopted in a 235-183 vote, after a House committee earlier adopted an amendment restricting the CFPB’s funding in 2020 and 2025.

In his prepared remarks on the House floor, Rep. Randy Neugebauer (R-Texas), the Chairman of the Financial Services Subcommittee on Financial Institutions and Consumer Credit, said the legislation was “essential to provide small businesses a voice in the regulatory process, and to help ensure community banks and credit unions continue to have a voice at the CFPB going forward.”

“The CFPB was created to protect consumers in the financial marketplace, and it would seem impossible to responsibly undertake this endeavor … without consulting the institutions that are more closely associated with the American consumer – small businesses and community financial institutions,” Neugebauer said.

Under the bill, the CFPB would be required to create an advisory board consisting of members of small consumer financial businesses.  Similar bi-partisan legislation last year was not signed into law.  H.R. 1195 would also codify two other advisory committees created by CFPB Director Richard Cordray: the Credit Union Advisory Council and the Community Bank Advisory Council.  Currently, these and two other advisory groups are voluntarily convened by the CFPB for input on everything from consumer engagement and policy development, to research.

Under H.R. 1195, the Credit Union Advisory Council and the Community Bank Advisory Council each would consist of between 15 and 20 members and meet with the CFPB at least twice a year to consult on its exercise of relevant consumer protection laws and regulations.  They also would provide information on emerging business practices in their industries, including new or emerging consumer financial products, regional trends, and other similar information.

Also, an amendment to H.R. 1195 prohibits the CFPB director from requesting more than $655 million in funding for the agency in fiscal year 2020 or more than $720 million in funding in fiscal year 2025.  The CFPB currently receives a portion of the Federal Reserve’s budget, based on a percentage of the Fed’s 2009 operating expenses, with an annual adjustment based on increases in the employment cost index.  Its funding cap was about $608 million in fiscal year 2014, close to $619 million for fiscal year 2015, and is expected to be about $632 million for fiscal year 2016.