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18 U.C. Davis Bus. L.J. 1 (2017-2018)

handle is hein.journals/ucdbulj18 and id is 1 raw text is: A NEW WAY TO FUND THE CONSUMER FINANCIAL PROTECTION BUREAU CONRAD Z. ZHONG* ABSTRACT Recent controversies surrounding the Consumer Financial Protection Bureau (CFPB) have revolved around its perceived lack of accountability to Congress and the administration. Notable critics of the CFPB, such as the Chairman of the House Financial Services Committee Representative Jeb Hensarling, have characterized the CFPB as a rogue agency. A key legislation sponsored by Rep. Hensarling is the Financial CHOICE Act, which contained such reforms to the CFPB as subjecting its entire budget to the appropriations process. The CHOICE Act has recently passed the House. Though reform of the CFPB is necessary, subjecting its entire budget to the congressional appropriation process risks undermining its effectiveness and independence as a dedicated federal regulator for consumer financial protection. In this paper, I propose an alternative funding solution to reform the CFPB without substantively changing its powers and structure: the hybrid funding model, with part of the CFPB's budget self-funded and the balance appropriated by Congress. The hybrid funding model is a pragmatic compromise that allows the CFPB's valuable mission to be preserved while enhancing its perceived accountability. Under this model, the CFPB will have two types of budget, with each earmarked to providingfundingfor certain functions of the CFPB. The self- funded budget (the size of which is determined by the CFPB) supports its administrative, operational, and other back-office functions of the CFPB. The congressional appropriations budget (the size of which is determined by Congress) covers costs related to the more politically sensitive activities of the CFPB, including its research, regulatory, supervisory, monitoring, and enforcement activities. The hybrid funding solution aims to provide the CFPB with both agency autonomy and congressional accountability while ensuring that the CFPB has a baseline amount of budgetary resources sufficient for it to maintain its basic operational needs.

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