President Donald Trump on July 4, 2025, signed into law the One Big Beautiful Bill Act (OBBB), sweeping legislation that has direct impacts on the future of the CFPB. The final bill reduces the CFPB's operating budget from 12 percent of the Federal Reserve's total operating expenses for 2009, adjusted annually for inflation, to 6.5 percent – nearly a 50 percent reduction in funding.
Initially, the U.S. House of Representatives voted to reduce the CFPB's budget request cap to 5 percent, as Holland & Knight previously reported. Subsequently, the U.S. Senate Committee on Banking, Housing, and Urban Affairs continued the Trump Administration's efforts to curtail the CFPB by seeking to set the cap at zero percent. However, after the Senate parliamentarian ruled that this provision would be an amendment to public policy rather than a matter of revenue and spending (and, therefore, be ineligible for inclusion in a budget reconciliation package), as previously reported by Holland & Knight, Senate Republicans were forced to make a concession and maintained the CFPB's cap – albeit at a significantly reduced figure.
Though the budget bill reduces the CFPB's cap to 6.5 percent, it does preserve the agency's ability to request funds from Congress for the purpose of maintaining agency operations (though it is not certain that the CFPB will find a receptive Congress, at least currently, to support any such request). This latitude to request further funding is critical as the CFPB is required to maintain sufficient resources to perform its statutorily required functions, a concern that has been highly scrutinized in recent months.
Currently, the agency's ability to fulfill more than 80 statutory functions is being investigated by the U.S. Government Accountability Office (GAO) and Federal Reserve's Office of the Inspector General, at the request of Senate Democrats. As these investigations are currently ongoing, it is uncertain how the CFPB's budget cuts will impact the conclusions reached.
This legislation also furthers a parallel interest of curtailing the CFPB's scope and operational authority. After initially pursuing this initiative via reductions in force (RIF), which sought to eliminate the vast majority of CFPB staff, the U.S. District Court for the District of Columbia enjoined the CFPB from enforcing any RIF, pending a full trial on the merits considering the legality of the action considering principles of separation of powers. As previously reported by Holland & Knight, the district court's preliminary injunction is currently being considered by the U.S. Circuit Court of Appeals for the District of Columbia Circuit, which heard oral argument on the matter in May 2025. The CFPB funding cut may help the Trump Administration in this litigation challenge, as some have speculated, in its argument that the CFPB should be downsized.
Though the impact of the CFPB's budget cut is yet to be seen, Democrats and Republicans have taken opposing stances on the ultimate implications that will occur. While Senate Banking, Housing, and Urban Affairs Committee Chairman Sen. Tim Scott (R-S.C.) sees this budget cut as an action that will force the CFPB to be fiscally responsible, committee Ranking Member Sen. Elizabeth Warren (D-Mass.) warns that the budget cuts will prevent the CFPB from effectively serving as the financial watchdog to monitor consumer finance violations.
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