The Council of Economic Advisers (CEA) estimates that the Consumer Financial Protection Bureau (CFPB) has cost consumers between $237 billion and $369 billion since 2011, including fiscal costs, increased borrowing expenses, and reduced loan originations. The primary cost driver is increased borrowing costs, totaling $222 billion to $350 billion, stemming from CFPB regulations that raise compliance and liability costs for financial institutions, leading to higher prices and reduced product offerings for consumers.
Key findings:
- Increased Borrowing Costs: The CFPB has increased borrowing costs across mortgages, auto loans, and credit cards. Specifically:
- Mortgages: $116-$183 billion in higher costs ($1,100-$1,700 per loan).
- Auto loans: $32-$51 billion ($91-$143 per loan).
- Credit cards: $74-$116 billion ($80-$126 per loan).
- Total borrowing cost increase: $222-$350 billion from 2011 to 2024.
- The CFPB's reported $21 billion returned to consumers (about $15 per borrower) is significantly overstated.
- Economic Efficiency Loss: Higher borrowing costs reduced loan originations, resulting in an economic efficiency loss of $1.5-$5.7 billion.
- Paperwork Burden: Annual paperwork requirements exceed 29 million hours (equivalent to 14,100 full-time employees), costing businesses $21 billion from 2011 to 2024.
- Fiscal Cost: The CFPB received $8.9 billion in transfers from the Federal Reserve from 2011 to 2024, resulting in a marginal excess tax burden (METB) of $4.4 billion. The total fiscal cost since inception exceeds $13 billion.
The CEA attributes these costs to the CFPB's regulatory and enforcement actions, which create compliance and liability risks for lenders, leading to higher interest rates and reduced lending. The CFPB's lack of transparency and its use of informal rulemaking further exacerbate these costs. The analysis leverages a natural experiment in the mortgage market (regression discontinuity design around the Ability-to-Repay threshold) to isolate the cost of CFPB regulation and extrapolate findings to other credit markets.
