Republican Louisiana Sen. John Kennedy accused the Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra on Wednesday of operating his agency in an illegal manner.
The Dodd–Frank Wall Street Reform and Consumer Protection Act mandates that the CFPB operate using funds from the “combined earnings of the Federal Reserve System.” However, Kennedy alleged during a CFPB “Semi-Annual Report to Congress” hearing that the Federal Reserve has not had any earnings and has been “losing money” since September 2022, claiming that this means the CFPB is “operating illegally.” (RELATED: Senate Confirms Warren Ally Rohit Chopra To Head Consumer Finance Bureau)
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John Kennedy Tells Chief Biden Regulator Point Blank That His Agency Is ‘Operating Illegally’ pic.twitter.com/RoWVgwvcK7
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“For the longest time, the Federal Reserve was earning money, but that stopped in September 2022,” Kennedy said. “Now they are losing money. They don’t have any earnings. They’re no longer transferring earnings to the general fund, and the Supreme Court based its decision on saying, this funding scheme is Constitutional under the appropriations clause, by saying that these earnings would go to the general fund from the Federal Reserve so getting them directly from the general fund is no big deal,” he added.
The Supreme Court ruled by 7-2 vote in May that the unconventional way the CFPB obtains funding is constitutional. Justice Samuel Alito wrote in the dissenting opinion that the ruling could establish a precedent wherein a federal agency can “bankroll its own agenda without any congressional control or oversight.”
“How are you entitled to any money right now?” Kennedy asked. “The Federal Reserve doesn’t have any earnings.”
Chopra responded that this is a “theory,” to which Kennedy said it is a “congressional statute.”
“You raise the difference between revenue and net income,” Chopra said. “There are other places throughout our laws. I can tell you we’ve looked at this issue. We do believe wholeheartedly everyone is complying with the statue.”
Chopra also disputed that the Federal Reserve has not had any earnings since September 2022.
“I know you don’t like to hear this, but the law is the law. You’ve been operating illegally,” Kennedy said.
“No, that’s not true, sir,” Chopra said.
Kennedy again asserted the Federal Reserve has had no earnings.
“We didn’t say revenue in the statute, we said earnings,” the Kennedy said. “How can you possibly argue that the Federal Reserve has had earnings? They’re losing money.”
“I’m happy to discuss this with you, but we have looked at this theory before,” Chopra responded.
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