The Trump administration has effectively shut down the Consumer Financial Protection Bureau, at least for now. Over the weekend, acting CFPB head Russell Vought stopped all agency supervision and announced he would not seek further funding. On Monday, he sent an email to all CFPB employees telling them, “Do not perform work tasks.” This followed an announcement from the previous temporary head — Treasury Secretary Scott Bessent — a few days earlier that he was freezing all the CFPB’s regulatory and enforcement actions. Donald Trump adviser and billionaire oligarch Elon Musk immediately signaled his approval. “CFPB RIP,” he wrote.
This is almost certainly illegal executive power overreach. When Congress created the CFPB as part of the Dodd Frank Act, it mandated the agency to carry out certain functions, including protecting military service members from predatory financial players. The CFPB’s labor union already filed two separate lawsuits to stop both the agency’s shuttering and Musk’s so-called Department of Government Efficiency from reviewing employee information.
This relatively small agency punches way above its weight.
There’s little doubt this will end up in the nation’s courts. But let’s be clear. Musk and his lackeys aren’t trying to shut down the CFPB because of such stated reasons as attacking the deficit or combatting overbearing bureaucracy. Instead, the attempted shutdown of the CFPB is an overt power grab by Big Tech — and their gain could result in the rest of us losing much more than almost anyone realizes.
As I’ve written before, Wall Street and now Big Tech don’t hate the CFPB because it’s an ineffective waste of money. They hate it because this relatively small agency punches way above its weight. Since the CFPB opened its doors in 2012, with a budget well under $1 billion a year, it’s returned more than $21 billion to Americans, protecting them from big banks’ abuses, fintech scams and multitudes of junk fees. In short, the CFPB has proven time and time again the government can be effective on behalf of the welfare of the people. No wonder oligarchs hate it.
The Consumer Financial Protection Bureau was established after the 2008 financial crisis, when poorly regulated sectors like the subprime mortgage industry helped set off the biggest economic crisis since the Great Depression. The new agency became the only regulator for nonbank financial service providers, like many mortgage companies.
Under director Rohit Chopra — who ran the agency for most of Joe Biden’s presidency — the CFPB not only aggressively protected Americans against the big banks and traditional nonbank financial services, pushing back on excessive check overdraft charges, credit card abuses and the like. It also began to rein in the burgeoning fintech sector, concerned that millions of Americans were using financial apps and services unaware that those services can lack the legal safeguards Americans enjoy when doing business with the banks (like, say, FDIC insurance).
When this occurred, the tech sector titans — used to being treated as financial saviors and not as bad apples — went ballistic, joining the big banks in their longstanding hatred of the agency and throwing their support to Donald Trump in the presidential election. They trashed the CFPB and began to spread lie after lie about it. Venture capitalist Mark Andreesen claimed the agency was complicit in “debanking” people for political and religious beliefs (Andreesen did not mention that in 2021, the CFPB shuttered the fintech startup LendUp for lying to customers and that among its backers was Andreesen’s venture capital firm). Over the weekend, Coinbase CEO Brian Armstrong called it “unconstitutional.” None of this was true. Under Chopra, the CFPB sought an end to illegal debanking, and the Supreme Court has ruled not once, but twice, that the agency was constitutional.
No one in this White House appears interested in better or more efficient consumer financial regulation.
Some have argued that regulators like the Federal Trade Commission can take over some of the functions of the CFPB. But that misses the forest for the trees. First, those agencies currently lack authority to cover many areas that the CFPB regulates. But even if they had it, the Trump administration is pushing for less financial governance in general. Since taking office, the Trump administration has not only attacked the CFPB, it’s also pulling back on such things as foreign bribery and lobbying investigations and legal enforcement in the crypto industry.
No one in this White House appears interested in better or more efficient consumer financial regulation. Instead, the tech titans are seeking to expand their monopolies into financial services — preferably without the CFPB referees standing in their way. Musk, for example, says he would like to turn his social media platform X into a financial services app, one that would function as an “everything app,” containing social media, financial services and shopping services. Last week, Musk announced a deal with Visa to partner on a digital wallet — something that would, in normal circumstances, fall to the CFPB to regulate. Instead, as Bloomberg reports, it’s possible that Musk’s Doge acolytes could use the bureau to access “sensitive and potentially competitive information” (The same is true for the Treasury Department info Doge was able to access).
This is an incredibly unhealthy state of affairs for both our politics and our economy. Our nation has prospered, in large part, not simply because we are a resource-rich country but because we were viewed internationally as a financially safe and trustworthy country with consistent rules, where everyone is considered equal under the rule of law. Opportunity is supposed to be offered to businesses and individuals alike.
All of this is, increasingly, not the case. Income and wealth inequality are near record highs, while class mobility is falling. Corporate consolidation and monopolization are eating away at small business formation, an engine for economic innovation and growth. Corruption is worse than many of our peer countries. And as the political ascendance of Musk makes clear, our nation is increasingly a kleptocratic oligarchy, where billionaire money buys politicians and results. Nothing good can come of that.