In the wake of the 2008 financial crisis, the destructive impact of predatory lenders on the well-being of individual borrowers and the health of the broader economy became increasingly clear. In response, a growing number of political figures, led by Sen. Elizabeth Warren, pushed for the creation of an agency that would represent consumer interests against predatory finance. The agency sought to ensure the enforcement of existing regulations and create new ones to rein in the financial industry.
Congress passed legislation that would establish the Consumer Financial Protection Bureau (CFPB) in 2010, and the newly minted agency began operations the following July. On its website, the CFPB explains its origin story this way: “Many Americans took on loans that they did not fully understand and could not afford. Although some borrowers knowingly took on too much debt, many Americans who behaved responsibly were also lured into unaffordable loans by misleading promises of low payments. Honest lenders that resisted the pressure to sell complicated products had to compete with their less responsible competitors.”
For the past 14 years the CFPB has protected ordinary Americans against credit card companies with misleading policy on interest rates and fees; against payday lenders, whose fees can add up to the equivalent of hundreds of percent interest per year; against banks for the charging of so-called “junk fees”; against lenders hawking misleading loans guaranteed by borrowers’ car ownership titles, and so on. In 2023 alone, it brought 29 enforcement actions, winning more than $3 billion in compensation for consumers, and bringing in nearly half a billion dollars in fines levied against companies.
This is, in other words, a modest example of the federal government putting its resources to work to benefit ordinary Americans against wealthy, exploitative corporations. For that very reason, it has long been in the crosshairs of the GOP and the party’s wealthy donor base. Trump’s first administration repeatedly tried to break the agency, with the Heritage Foundation lobbying for its demise and Trump appointing the fiercely pro-business Mick Mulvaney to head the agency. The administration also argued that the creation of the CFPB as an independent agency was in and of itself unconstitutional.
Ultimately, Trump 1.0 didn’t succeed in its efforts to incapacitate the agency, and in many ways the CFPB’s footprint, and its enforcement actions grew, or, at the very least, continued apace through 2021. When Biden became president, pushing a pro-consumer agenda, the CFPB continued to grow in importance, to the disdain of much of corporate America.
Now, under Trump 2.0, corporate America has its second chance to destroy a government outfit that offers modest protections for the vulnerable against the powerful and the rich.
In the weeks after Donald Trump’s inauguration on January 20, Elon Musk’s so-called “Department of Government Efficiency” (DOGE) tried to simply “delete” the CFPB, despite the fact that it was created by Congress and can thus only be legally abolished by Congress. In fact, after USAID, no part of the federal bureaucracy attracted the malignant laser-focus attention of DOGE as did the CFPB, which Musk took to regularly attacking on his X account.
On February 7, the oligarch, whose Tesla company had faced hundreds of consumer complaints to the CFPB, and whose efforts to create an X-Visa payment processing partnership were also likely to be flagged by the bureau, posted “CFPB RIP” on X. It was in keeping with DOGE’s efforts to go after the National Labor Relations Board, the Office of Federal Contract Compliance Programs, and other parts of the federal bureaucracy that had, at one point or another, stood in the way of the most predatory or unethical of Musk’s business practices.
For 14 years, the CFPB has stood for the little person against the oligarchs. Now the oligarchs are once again out in force.
The next day, newly acting head of the CFPB Russell Vought, who also is in charge of the powerful Office of Management and Budget, ordered agency staff to stop all work on developing new rules, on investigating corporate malfeasance, as well as all litigation and all public communication. He then informed the Federal Reserve, which funds the agency, that the CFPB won’t be taking any additional moneys for its operations the following quarter. The union representing workers at the agency also let it be known that they had reason to fear he was preparing to return its $711 million balance, thus essentially rendering it entirely defanged. This was followed up by another memo to the agency’s roughly 1,700 staff prohibiting them from engaging in any work at all, and to not come into the office — an office which Vought then reportedly sought to have the lease terminated on.
In the week surrounding February 14, dozens of probationary staff at the agency were fired. Vought also canceled $100 million in contracts that the CFPB had with companies that did things such as help process consumer complaints. At about the same time, DOGE operative and former pharmaceutical lobbyist Chris Young was brought in as a “senior adviser” to the bureau.
All of this prompted a fierce legal pushback. Days after Vought’s efforts to dismember the CFPB in all but name, the National Treasury Employees Union went to court alleging that Vought was planning to lay off 95 percent of the agency’s staff.
It didn’t take long for U.S. District Judge Amy Berman Jackson to side with the union in this case. She concluded that Vought and/or DOGE could not simply fire thousands of employees without cause and issued a temporary restraining order. In early March, the order was extended, and, as of publication, the agency’s corps of staff remains largely intact, albeit in the Vought-ordered deep freeze in which most of its daily work is no longer being carried out.
In recent weeks, the CFPB has dropped at least 10 cases against lenders, including, according to Reuters, a case against Capital One accusing the bank of withholding billions of dollars in interest payments from customers. Dozens of other cases are now on hold.
All of this shifts the burden of protecting consumers onto the states, privately funded lawsuits and ultimately consumers themselves. That doesn’t mean consumers have no protections left; but it does mean that under Trump, the federal government is basically washing its hands of even modest efforts to protect consumers — especially the low-income and/or borrowers of color who have most frequently ended up at the wrong end of particularly exploitative lending practices — thus further tipping the scales in favor of some of the worst players in the lending industry.
Given the other actions of this oligarchical administration, none of this should be a surprise. Part of DOGE’s mission seems to be to obliterate any system or agency that can stop Musk’s and Trump’s accumulation of power and wealth. For 14 years, the CFPB has stood for the little person against the oligarchs. Now the oligarchs are once again out in force, uprooting the systems that stand in their way and rapidly returning the lending industry to the worst practices of the pre-financial crisis days.
We’re not backing down in the face of Trump’s threats.
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Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
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