President Donald Trump and his Department of Government Efficiency (DOGE) boss Elon Musk are on a tear firing federal workers and downsizing or closing federal agencies in the name of financial retrenchment. Cutting cost in theory where waste exists is acceptable, but we’re seeing almost indiscriminate slashing of government just for the sake of shrinking government without much thought to long-term consequences and without much real savings as advertised.
Save the Consumer Financial Protection Bureau (C.F.P.B)
One disturbing and dangerous development is the tearing down of the Consumer Financial Protection Bureau (CFPB). Americans should be alarmed that the Trump-Musk tandem has shuttered the CFPB headquarters, halted most of its operations, laid off workers and looking to completely dismantle the agency. Why should Americans, particularly, the typical main street American care what happens to CFPB? It’s because the CFPB is the federal agency that acts like the policeman over banks, credit unions, security firms, payday lenders, mortgage-servicing operations, foreclosure relief service, debt collectors, for-profit colleges, and other financial companies in the U.S. The CFPB protects consumers from financial exploitation and fraud.
The CFPB was formed in response to the great financial crisis of 2008 that had predatory mortgage lenders push the American banking system to the brink of collapse. Tens of thousands of Americans were tricked into subprime loans and eventually saw their properties foreclosed. The founding of the CFPB brought consumer protection—regulation, supervision, and enforcement—under one roof to ensure consumers are no longer scammed by financial institutions.
Sen. Elizabeth Warren said if the CFPB shuts down, “it’s open season on everyone who has a credit card, a mortgage, a car loan, a payday loan, a student loan, or uses an online financial app.”
Just a few of what CFPB does: 1) finalized a rule that would prohibit agencies from listing medical debt on credit reports, 2) investigates deceptive telemarketing, illegal fees, 3) seeks to regulate payday lending, debt collections, credit ratings, 4) ordered the reduction in credit card late fees and other bank fees, 5) looks into online banking and e-commerce, 6) writes and enforces rules for financial institutions, 7) monitors and reports on markets, as well as collects and tracks consumer complaints, 8) sues the big banks that do not comply with the laws.
Once a financial institution acquires $10 billion in assets, it falls under the guidance, rules, and regulation under the CFPB. The bank will then be known as a CFPB regulated bank. The CFPB will examine the institution for compliance with bank regulatory laws.
Sen. Warren, who helped get the agency up and running, pointed out Musk may well have a personal interest in defanging the CFPB. Since taking over Twitter and changing its name to X, Musk has talked about transforming the platform into an “everything app” offering services like online banking and e-commerce. Last month, X announced a partnership with Visa to create X Money Account, which would enable its users to buy stuff online and make peer-to-peer payments. In theory, such a business could well attract the attention of the CFPB, which has been expanding its authority over big online-payment systems.
Warren said, “The banks see themselves having a more profitable future if they can get rid of the CFPB.” She adds, “The CFPB is living, breathing proof, every day, that we can make government work for regular people. That we can use government to level the playing field, so that students don’t get cheated on their education loans, or a family can take out a mortgage to buy a house without worrying there’s a trick back on page thirty-six that means they are going to lose the house in two years. That’s government working the way it should.”
Trump siding with the average Joe?
The large banks have long lobbied Congress for less regulations and CFPB has been the government’s enforcer along with other federal regulatory bodies like the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA).
Trump is doing what the big banks want, evidently. One of Trump’s first acts this second term was to appoint an acting director of CFPB who immediately ordered the bureau to stop regulatory activity.
The CFPB ultimately is about promoting fairness, transparency and protection for the consumer, the typical main street (as opposed to Wall Street) Americans – the exact group that Trump vowed to work and “fight” for in his “populist” campaign.
But as the weeks pass into Trump’s second term, increasingly more Americans are starting to think that Trump is a bait-and-switch candidate as his approval polls descends! Donald Trump the candidate promised to fight for typical working Americans but instead as President he’s given up on lowering the cost of groceries, increased some tariffs and is poised to elevate them higher which is bound to hurt consumers financially.
Now this disempowering of a regulatory consumer protection agency that looks after the interests of typical Americans and given that there is an increasing need for financial protection as scams proliferate in the digital age, it’s looking apparent that Trump is as many are saying – he’s a bait-and-switch politician siding with powerful monied institutions over the American people. We need more consumer protection, not less!
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