The Consumer Financial Protection Bureau continues to receive criticism for excessive spending. Under the Dodd-Frank Act, the CFPB receives its funding – which was $497,895,311 for fiscal year 2014 – from a fixed percentage of the Federal Reserve’s budget. Appropriation of the CFPB’s budget is ultimately at the sole discretion of its director, Richard Cordray.
With a lack of congressional oversight, the agency has free rein to spend federal dollars as it pleases.
Office Building Renovations
The CFPB spent tens of millions of dollars renovating its headquarters, located one block from the White House. Tenants in Washington’s expensive commercial real estate market pay high rates for building renovations, but the cost of CFPB’s renovations has reached triple the market rate.
Originally, the CFPB planned $55 million in renovations to its Class “B” office building, an estimate at the high-end for renovations of similar buildings. The amount actually exceeds the GSA’s budget for all construction and acquisition of all federal buildings. After revising its financial plan twice, however, CFPB renovation costs ballooned to $215.8 million.
In comparison, restorations are required to repair the U.S. Capitol building, including “1,300 known cracks and breaks” to the Capitol Dome. Estimates of the cost to repair this national landmark are just under $60 million, which is $150 million less than the CFPB’s current renovation budget.
For a typical Class “B” office building in D.C., renovations cost about $100 per square foot. For a more upscale, Class “A” building, renovation costs are about $150 per square foot. But for its office building, the CFPB is spending more than $590 per square foot on renovations, almost four times the market average for upscale properties.
According to a 2014 Inspector General’s report, “the approval of funding for the renovation was not in accordance with the CFPB’s current policies for major investments” because “the CFPB saw this approval as a formality.” The report further noted that “the CFPB was unable to locate any documentation of the decision to fully renovate the building.”
Rep. Patrick McHenry, Chairman of the Financial Services Oversight and Investigations Subcommittee called the IG’s findings “deeply troubling” and said, “The continuously growing price tag is a tremendous waste of funds and, amazingly, there is still no assurance the $216 million price tag won’t grow higher. Now we learn the Bureau, presumably taking a page out of the IRS’ playbook, has lost the documentation showing who actually gave final approval for this massive waste.”
Despite public outrage following disclosures of fiscal excesses at government conferences, the CFPB continues to spend a significant amount of money on employee travel costs without adequate supervisory oversight. In fiscal year 2014, the CFPB spent more than $17 million on travel. The U.S. House Financial Services Committee asserted that such a “substantial travel expense requires strong procedures and controls to prevent abuse.” However, an independent audit of the CFPB by ASR Analytics concluded the following:
The travel request is approved by the Supervisor without any knowledge of the estimated dollar amount to be expended on the trip. Further, Travel Vouchers are not routed for approval by the traveler’s Supervisor. We recommend that the dollar amount be stated in the initial travel request and approved by the Supervisor. Additionally, CFPB should strengthen internal control by instituting approval of the Travel Voucher by the Supervisor before it is routed to the Approving Official in the Office of Travel for payment.
A 2014 report by the Office of Inspector General (OIG) found that the CFPB did not have “sound policies and procedure” for travel, procurement and supervision.
According to another report issued by the OIG later in 2014, “the risk of illegal, improper, or erroneous use” of the CFPB’s travel card program was elevated. It noted that “the CFPB spent more than $11 million” on travel card spending had more than 1,200 active cardholder accounts.
In a concerning move by a financial regulatory agency, CFPB has hired employees who lack a strong background in banking law. As a result, the CFPB has shelled out thousands of dollars to send some of its attorneys to a “Banking Law Fundamentals” class, according to documents obtained by a Judicial Watch FOIA request.
To resolve a communications issue for two entry-level employees, the CFPB spent nearly half a million dollars in sign language translation services, according to a FOIA request by Judicial Watch.
In addition, Director Cordray is allowed to request an additional $200,000,000 from the government if he finds it necessary.