On January 25, 2021, Allyson Baker was quoted in American Banker on how the Consumer Financial Protection Bureau (CFPB) will use its civil penalty fund. According to the article, at the end of September, the agency had amassed $576 million in its fund — a 6% increase from a year earlier — after collecting over $34 million in fines from companies during the fiscal year.
Former CFPB Director Kathy Kraninger touted efforts to provide redress from the fund for consumers harmed by companies that could not pay hefty amounts. However, the Trump administration's attempts to use the fund as a lifeline faced challenges over the difficulty in finding harmed consumers and concerns about the optics of the consumer bureau spending federal resources.
Though GOP officials are typically more cautious than Democrats about using up federal coffers, some observers point out that the agency's use of the fund is limited only to certain activities. “It is a huge amount of money,” said Baker. “There is a very narrow set of prescriptions of what the money can be used for.”
The civil penalty fund can be used for only two purposes: to compensate consumers who have been harmed or for consumer education and financial literacy programs. Fines and penalties issued against wrongdoers for violations of consumer financial laws are deposited into the fund.
Because the civil penalty fund has so much money, some experts have suggested the CFPB’s penalties should be lower, given that the agency is unable to pay out as much as it collects. "Maybe that calibration needs to be made smaller," said Baker. "Maybe they need to assign a smaller amount of civil money penalties to certain conduct if there is that much money left over that is not getting distributed to consumers."
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