Federal Reserve chairwoman Janet Yellen weighed in on one of the more contentious financial policy debates in Congress in a private conversation, a lawmaker said Wednesday, and suggested that Congress should change the way that the Consumer Financial Protection Bureau is funded.
Currently, the consumer agency is funded by Yellen’s agency, which earns income through its portfolio of government bonds. Republicans critical of the agency’s mission have argued that the arrangement prevents them from exercising authority over the bureau by controlling its spending.
On Wednesday, however, Rep. Blaine Luetkemeyer of Missouri said that Yellen had questioned that arrangement during a recent conversation with him over breakfast.
Recounting the story for an audience at the offices of the Financial Services Roundtable in Washington, Luetkemeyer said that he asked Yellen if she was tired of the Fed being used as “an ATM for the CFPB.”
“And she chuckled a little bit and she said, ‘Well, you know, if you could do something about that, I’d sure appreciate it,'” Luetkemeyer said.
Financial reform legislation passed by Republicans in the House of Representatives this month would change the CFPB so that it was funded through congressional appropriations. The Trump Treasury’s new report on financial regulation also suggested that change. Democratic leaders have strongly criticized efforts to change the agency, touting the money it has returned to consumers in its oversight of mortgages, credit cards, and other financial products.
Asked for comment, a representative of the Federal Reserve declined to discuss a private meeting.
Yellen’s public schedule indicates that she had breakfast on February 28 with Luetkemeyer, who is the chairman of a subcommittee on financial institutions and consumer credit.
The CFPB’s budget is set for $646 million in fiscal year 2017. To access funds, it simply requests them from the Fed.
In testimony before the House Financial Services Committee in February of 2016, Yellen told Rep. Andy Barr, R-Ky., that the Fed does not oversee the agency’s budget. In funding it, she said, the central bank “abide[s] by the law.”
