US Senate referee rules against cuts to CFPB, financial regulators in tax and spending bill

By Pete Schroeder

WASHINGTON (Reuters) -Republican provisions to slash funding for the Consumer Financial Protection Bureau and other financial watchdogs violate budgetary rules, the U.S. Senate's nonpartisan referee said on Friday, jeopardizing their inclusion in a sweeping tax-cut and spending bill pushed by President Donald Trump.

Senate parliamentarian Elizabeth MacDonough, whose role is to ensure lawmakers follow proper legislative procedure, said a provision to effectively eliminate the budget for the CFPB could not be approved via a simple majority vote in the Republican-controlled chamber.

Similarly, provisions slashing the budget for the Office of Financial Research, eliminating the Public Company Accounting Oversight Board, and cutting pay for Federal Reserve employees were deemed out of bounds and unable to advance via majority support, according to Democrats on the Senate Budget Committee.

Republicans had sought to include the policy changes as part of the Senate version of Trump's One Big Beautiful Bill Act.

If Republicans opt to keep those provisions, they would need 60 votes to pass in the 100-seat chamber, rather than the simple majority that other elements of Trump's tax and spending package would need under a complex budget process being invoked by Republicans to bypass Democratic opposition.

Republicans hold 53 seats in the Senate and Democrats are expected to oppose the provisions.

The CFPB receives its funding directly from the Federal Reserve, and can request up to 12% of the Fed's profits. Republicans have complained for years the agency is too powerful and have tried to require its budget be set by Congress, arguing that would make the CFPB more accountable.

Under Trump, the CFPB has been drastically curtailed, with several rulewriting and enforcement initiatives being scrapped and the administration attempting to lay off large numbers of agency staff. Many of those efforts are currently being challenged in court.

Senate Banking Committee Chairman Tim Scott, the Republican whose panel drafted the provisions in question, said in a statement he would continue working with MacDonough, without offering specifics on next steps.

"I remain committed to advancing legislation that cuts waste and duplication in our federal government and saves taxpayer dollars," he said.

(Reporting by Pete Schroeder in Washington; Editing by Nia Williams)