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The CFPB's megabill moment

Presented by Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Quick Fix Republicans are nearing their biggest win ever in a years-long push to defang the Consumer Financial Protection Bureau. But on the left, supporters of the CFPB are warning that the impact of Republicans' plan to cut the agency's funding as part of their 'big, beautiful bill' extends well beyond the consumer bureau — and some are already plotting how to use the move against the GOP in the future. The Senate's megabill would cut the funding the CFPB has access to nearly in half by putting a new, lower cap on the amount of money the agency can get from the Federal Reserve, which provides the bureau's dollars. CFPB supporters are warning that the novel legislative approach — which would lower the agency's funding cap from 12 percent of the Fed's operating budget to 6.5 percent — could backfire on Republicans if a future Democratic Congress uses the same move to expand the bureau's work. 'I have no reason to doubt that when Democrats take back unified control of Washington, you're not going to see Democrats simply go back to the original Dodd-Frank 12 percent cap for the CFPB,' said Seth Frotman, a former official at the consumer bureau who now serves as a senior fellow at the legal nonprofit Towards Justice. 'And they could decide to take another 10 percent and drive that money to the FTC or the DOJ antitrust division.' The upper chamber's CFPB proposal was OK'd by the Senate parliamentarian, Elizabeth MacDonough, who is responsible for advising which plans are eligible for the filibuster-skirting budget-reconciliation process that Republicans are using to pass their megabill without Democratic votes. Though she rejected an earlier plan to zero out the agency's funding entirely, MacDonough's ruling on the language has sparked concern by former agency officials that future reconciliation bills could also target other independent regulators. 'Any funding mechanism now can be revised by any future Congress,' said Diane Thompson, a former senior adviser to Biden-era CFPB Director Rohit Chopra who now works for the National Consumer Law Center. 'That's absolutely opening a Pandora's box in ways that aren't just about Republicans vs. Democrats, but are about generally creating instability.' Republicans say slashing the CFPB is worth pursuing irrespective of concerns about what Democrats might do in the future. 'I don't generally buy this argument that we shouldn't do it because it may cause escalation or the Democrats will do it back,' said Sen. John Kennedy (R-La.), who sits on the Senate Banking Committee. 'I live on planet Earth. The escalation's already started, and has been for some time.' Sen. Mike Rounds, a senior Banking panel Republican from South Dakota, said the move 'doesn't restrict [Democrats], nor does it push them.' 'If they could figure out a way to expand it, they probably would anyway,' he said. 'In this case, we think it's the right thing to do.' Democrats are also already seeking to weaponize the CFPB cut as part of their broader messaging about the GOP megabill. Republicans blocked an amendment from Sen. Elizabeth Warren (D-Mass.) on Monday that would strip the CFPB language from the bill, forcing lawmakers to go on the record about the issue specifically. Democrats hope the move will prove to be unpopular. 'When this financial cop can't do its job, there's no one else in the entire federal government to pick up the slack,' Warren said on the Senate floor. IT'S TUESDAY — What are you watching for in the eleventh-hour megabill talks? Let me know at jgoodman@ As always, send MM tips and pitches to Sam at ssutton@ Driving the day Fed Chair Jerome Powell participates in a policy panel before the European Central Bank Forum on Central Banking 2025 in Sintra, Portugal, at 9:30 a.m. … The Labor Department will release the Job Openings and Labor Turnover Survey (JOLTS) at 10 a.m. … The ISM Manufacturing Index is out at 10 a.m. … Former Sen. Heidi Heitkamp (D-N.D.), American Enterprise Institute President Robert Doar, Brookings Institution president Cecilia Elena Rouse and former New Hampshire Gov. Chris Sununu speak at 1:30 p.m. at the launch of 'America's Rural Future: Announcing the Brookings-AEI Commission on U.S. Rural Prosperity.' Where the megabill goes from here — Senators voted late into the night Monday as Republican leaders plowed ahead with their push to get the 'big, beautiful bill' to President Donald Trump's desk by July 4. Several hurdles remain — with the biggest ones lurking in the GOP-controlled House. As our Benjamin Guggenheim reports, House fiscal hawks are looking at the math underlying Senate Republicans' plan, and they don't like what they see. As Senate Republicans try to muscle President Donald Trump's 'big, beautiful bill' for final passage, they're on track to violate a budget framework brokered between House fiscal hawks and Speaker Mike Johnson. Under that framework, if the GOP piles on tax cuts over $4 trillion, they'd need to match them dollar-for-dollar with additional spending cuts beyond the $1.5 trillion in the House-passed bill. —Another potential holdup in the lower chamber appeared on track to be resolved late Monday when Sen. Marsha Blackburn pulled her support for a five-year deal on a moratorium against state and local artificial intelligence laws that she struck with Senate Commerce Chair Ted Cruz just one day earlier. —A revised plan by Senate Republicans to impose a new 1 percent tax on remittances is now projected to bring in a lot more money to the Treasury even though lawmakers have slashed the rate, our Brian Faler reports. Republicans are dropping plans to shield U.S. citizens from the tax on money sent overseas, which had been aimed squarely at undocumented immigrants. Trade Soon? — Press Secretary Karoline Leavitt told reporters that Trump will meet with his trade advisers to set tariff rates on countries that he thinks are not on track to reach trade deals with the United States by next week's deadline, Doug Palmer reports. Unintended consequences — The president's tariff policies are prompting some companies to move certain operations overseas, particularly if their manufacturing processes require more than one trip across the border. 'Is that crazy, or what?' the CEO of one such company, Cocona Labs, told The NYT's Peter Goodman. Wall Street And what a ride it's been — Nearly three months after Trump's Liberation Day tariff announcements sparked a massive sell-off in stocks, the S&P 500 closed Monday's trading session at an all-time high, per Bloomberg's Rita Nazareth. The Nasdaq also closed at a record, representing its best quarter in five years, according to The WSJ. Watch this space — Declan Harty reports that the Supreme Court has agreed to hear arguments over whether activist investors can challenge certain decisions by investment fund managers under an 85-year-old law. Crypto The view from Europe — European lawmakers are warning that Brussels' liberal approach to regulating stablecoins could cause a cash crisis, our Giovanna Faggionato reports from Brussels. In a letter to the Commission, seen by POLITICO, the Greens' Rasmus Andresen, Eero Heinäluoma of the Socialists and Democrats and Johan Van Overtveldt from the center-right European Conservatives and Reformists said the refusal of the EU executive to ring-fence stablecoins issued within the bloc from those issued overseas could lead to a run on the continent's banks. Jobs report Melissa Neuman is now chief of the Treasury branch at OMB. She most recently was acting Treasury branch chief. — Daniel Lippman