Reconciliation Recommendations of the House Committee on Financial Services

Cost Estimate
April 24, 2012

As approved by the House Committee on Financial Services on April 18, 2012

H. Con. Res. 112, the Concurrent Budget Resolution for fiscal year 2013, as passed by the House of Representatives on March 29, 2012, instructed several committees of the House to recommend legislative changes that would reduce deficits over the 2012-2022 period. As part of this process, the House Committee on Financial Services was instructed to recommend changes to current law that would reduce the deficit by $29.8 billion for fiscal years 2012 through 2022.

CBO estimates that the reconciliation recommendations approved by the Committee on Financial Services on April 18, 2012, would reduce direct spending by $40.9 billion and revenues by $10.6 billion over the over the 2012-2022 period, assuming enactment on or near October 1, 2012. Taken together, CBO estimates that enacting the recommendations would reduce budget deficits by $30.4 billion over the 2012-2022 period, assuming enactment on or near October 1, 2012.

In addition, the Chairman of the House Committee on the Budget has directed CBO to prepare estimates assuming a July 1, 2012, enactment date for this year’s reconciliation proposals. If the legislation were enacted by that earlier date, some of the Financial Services Committee’s recommendations would result in greater budgetary savings than those estimated assuming an October 1 enactment date. Under the alternative assumption of a July 1 enactment date, CBO estimates that the Financial Services proposals would reduce deficits by $4.4 billion over the 2012-2013 period and $31.1 billion over the 2012-2022 period.

The committee’s recommendations would make the following changes:

  • Subtitle A would repeal the authority provided to the Federal Deposit Insurance Corporation (FDIC) in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203) to liquidate large, systemically important financial companies in default or in danger of default.
  • Subtitle B would terminate the authority of the Secretary of the Treasury to provide new assistance under the Home Affordable Modification Program (HAMP).
  • Subtitle C would terminate transfers of funds from the Federal Reserve for expenses of the Bureau of Consumer Financial Protection (CFPB) and authorize appropriations for the CFPB for fiscal years 2012 and 2013.
  • Subtitle D would reauthorize the National Flood Insurance Program (NFIP) of the Federal Emergency Management Agency (FEMA) through 2016 and amend the program to increase premiums charged to certain policyholders.
  • Subtitle E would eliminate the Office of Financial Research (OFR), established in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In addition to the changes in direct spending and revenues, CBO estimates that implementing the committee’s recommendations would cost $766 million over the 2012-2017 period, assuming appropriation of the necessary amounts. That estimate includes funding for the CFPB, the Financial Stability Oversight Council, and flood mapping and mitigation efforts under the National Flood Insurance Program (NFIP).

The legislation would impose intergovernmental and private-sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on public and private mortgage lenders. Because the mandates would require only small changes in existing industry practice, CBO expects the cost to comply with the mandates would be small relative to the annual thresholds established in UMRA for intergovernmental and private-sector mandates ($73 million and $146 million in 2012, respectively, adjusted annually for inflation).