Banking and Finance Law Daily Wrap Up, CONSUMER FINANCIAL PROTECTION BUREAU—House Republicans introduce bill to overhaul CFPB funding, enforcement authority, (Sep 1, 2026)

By Shashi Kant, BALLB, LLM

The legislation would restructure the CFPB’s funding, rulemaking, supervision, and enforcement authority.

House Committee on Financial Services Chairman French Hill (R-Ark.) and Financial Institutions Subcommittee Chairman Andy Barr (R-Ky.), joined by nearly all Committee Republicans, on Sept. 1, 2026, unveiled the Consumer Financial Protection Accountability and Reform Act of 2026 (H.R. 10184). The bill would take the Consumer Financial Protection Bureau out of Federal Reserve funding and place it under the regular Congressional appropriations process. It would also narrow the agency’s enforcement authority and raise the asset threshold for banks and credit unions subject to its supervision.

Background. The bill follows a discussion draft the Committee circulated on July 27, 2026, under the working title CFPB Reform Act of 2026 (see Banking and Finance Law Daily, Jul. 27, 2026). The Committee sought public comment on the draft through Aug. 21, 2026. Barr said the CFPB has cost consumers almost $370 billion since 2011, citing a White House study released earlier this year. He described the agency as “rogue since the beginning.” The study Barr cited, a Council of Economic Advisers report, found the CFPB had cost consumers between $237 billion and $369 billion in total, primarily through increased mortgage borrowing costs (see Banking and Finance Law Daily, Feb. 18, 2026). That report drew criticism from consumer advocacy groups. The National Consumer Law Center called its claims “unfounded.”

Bureau governance. Title I of the bill would end the CFPB’s funding from Federal Reserve earnings and eliminate the Consumer Financial Protection Fund’s authority to carry unused balances between fiscal years, according to the bill summary the Committee released with the bill. Remaining civil penalties in the Civil Penalty Fund, after payments to victims, would revert to the Treasury. Rulemakings would require a cost-benefit justification addressing costs, benefits, and effects on small entities. The Office of Management and Budget would conduct a retrospective review of major CFPB rules every eight years, and the CFPB would have to propose amending or repealing a rule the if the review found a lack of net benefits. The bill would also create an inspector general dedicated to the CFPB, required to testify semiannually before the House and Senate banking committees.

Enforcement standards. Title II would narrow the CFPB’s authority to deem a practice “abusive” under the unfair, deceptive, or abusive acts or practices standard, the section-by-section states. That designation would apply only where a practice risks substantial injury not outweighed by countervailing benefits. The bill would prohibit monetary relief where a company shows good-faith compliance efforts and would give companies 180 days to cure a violation before the CFPB could sue. Enforcement suits would have to be filed where the company is headquartered or in the District of Columbia. The bill would also bar the CFPB from using enforcement claims to extend a statute of limitations, and it would clarify that the CFPB cannot act against insurers already regulated by state insurance regulators.

Small-dollar lending. Title III would amend the Truth in Lending Act to create a safe harbor for depository institutions offering small-dollar credit products of $3,500 or less that meet specified underwriting, disclosure, and fee standards. It would require federal financial regulators to label nonbinding guidance as such. The bill would also direct the Government Accountability Office to study buy now, pay later services within a year and would establish a federal framework for earned wage access services.

Supervisory thresholds. Title IV would raise the asset threshold for CFPB supervision and examination of banks and credit unions from $10 billion to $30 billion, indexed going forward to nominal gross domestic product growth, according to the bill summary. Institutions above the new threshold could elect their prudential regulator for consumer-compliance supervision, except for global systemically important banks, which would remain under CFPB supervision. The CFPB could still refer enforcement actions to a prudential regulator or bring its own action if the regulator does not act within 120 days. The bill would also require the CFPB to submit proposed rules to prudential regulators for comment before seeking public comment.

Penalties and complaints. Title V would remove the CFPB’s authority to impose civil penalties for violations that are not knowing or reckless. It would lower the maximum penalty for knowing violations from $1 million per day to $50,120. The bill would limit the CFPB’s use of information gathered through market-monitoring orders in supervision and enforcement. It would bar states from bringing enforcement actions against a company the CFPB is already pursuing. Consumers submitting complaints to the CFPB would have to attest to their accuracy under penalty of perjury and first submit complaints directly to the institution involved.

Timeline. The Committee held a fireside chat on the proposed reforms at 10 a.m. the day the bill was introduced. Hill said he looks forward to bringing the legislation to the House floor. The Committee posted a one-pager and section-by-section summary of the bill alongside its text.

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