House finance budget bill nixes PCAOB, curbs CFPB funding

The House Financial Services Committee passed a budget bill Wednesday that eliminates the Public Company Accounting Oversight Board and caps the Consumer Financial Protection Bureau’s budget at roughly $249 million, a drastic reduction from its recent budgets.

Committee chair French Hill, R-Ark., said the moves outlined in the budget bill — which will be combined with similar bills in other committees to make up the bill that will appear on the House floor for a vote — deliver more than the $1 billion annual savings required by the House Budget resolution that passed in February. The bill passed the committee by a 30-22 vote along party lines.

“We’re taking a strong step toward restoring fiscal discipline and ensuring government funding is being used wisely and transparently,” Hill said. “To deliver on President Trump’s agenda … House Republicans will reduce the deficit and exceed the $1 billion savings target outlined in the budget resolution.”

The bill would eliminate the PCAOB’s ability to assess and spend accounting support fees, would direct any unspent funds back to the Treasury Department and direct the Securities and Exchange Commission to take over the board’s responsibilities and cease collecting fees. The PCAOB was established in 2003 as part of the Sarbanes-Oxley Act to be an independent investigator and standard-setting body for auditing firms, a need that Congress identified after the WorldCom and Enron accounting scandals created a crisis of confidence in public accounting statements.

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The bill would also cap the CFPB’s budget at 5% of the Federal Reserve’s total operating budget for 2009, a figure Hill said would amount to roughly $249 million. The CFPB’s estimated operating budget for the 2024 fiscal year was $684.9 million. The bill would also direct the CFPB to return all remaining funds from the Civil Penalty Fund back to the Treasury Department after direct victims had been compensated. The bill also directs the U.S. Department of Housing and Urban Development to rescind unobligated funds for the Green and Resilient Retrofit Program, which were appropriated as part of the Inflation Reduction Act in 2022. The program provides grants for landlords receiving HUD assistance to improve energy and water efficiency, improve indoor air quality and climate resilience for their properties.

The bill also limits assessments collected by the Office of Financial Research to the average operating budget of the Financial Stability Oversight Council over the prior three years. 

During a marathon markup hearing that went into the evening, Democrats offered 35 amendments to the bill, including measures to investigate who is investing in the Trump family’s World Liberty Financial crypto company, as well as to maintain funding for the PCAOB and CFPB. None of the Democratic amendments were adopted; all were voted down along party lines. 

Speaking in favor of an amendment to maintain the PCAOB, Rep. Maxine Waters, D.-Calif., said the organization inspects auditing firms not only in the U.S. but in more than 50 countries abroad, including China. Dissolving the board and handing its duties to the SEC, she said, would cost taxpayers money and give China an opportunity to press its advantage. The PCAOB — which is a non-governmental standard-setting body — has an agreement with the Chinese government to inspect auditing firms, she said, but the SEC does not.

“Every Republican and Democratic member of this committee must understand that if we shut down the PCAOB and transfer its authority to the SEC, we’re shutting down our regulators’ access to China-based auditors,” said Waters, the committee’s ranking member. “If we disband the PCAOB today, the SEC cannot simply be a substitute.”