When the Consumer Financial Protection Bureau made an appearance in the Heritage Foundation\u2019s Project 2025 blueprint, the conservative group\u2019s plan was simple: Abolish it entirely.<\/p>\n
Now, with a Project 2025 co-author in charge of the bureau, that idea looks like a real possibility.<\/p>\n
Over the weekend, Russ Vought, President Donald Trump\u2019s pick to head the powerful Office of Management and Budget, took over as de facto head of the agency and subsequently ordered all nonessential work there to stop. Vought is one of more than 30 co-authors of Project 2025, the conservative policy blueprint for the Trump administration\u2019s agenda, though he did not write the section on the CFPB.<\/p>\n
\u201cThe Consumer Financial Protection Bureau is arguably the most powerful and unaccountable regulatory agency in existence,\u201d the report states.<\/p>\n
Whether the bureau is rendered toothless by its new leadership or abolished by congressional action, its emergence as a target for conservative ire has been years in the making, boosted most recently by technology executives including Elon Musk and venture capitalist Marc Andreessen. Created by Democrats, led by Sen. Elizabeth Warren, of Massachusetts, in the wake of the Great Recession, the CFPB lodged steady but largely unglamorous wins for consumers. <\/p>\n
Yet all the while, it faced a drumbeat of opposition from small-government conservatives and business interests who challenged not only its regulations and enforcement actions, but its very basis for existing. Consumer complaints about corporate misbehavior have by some measures reached all-time highs. <\/p>\n
\u201cThis is an agency that has an incredible amount of responsibility for regulating in the financial services sector,\u201d said Julie Margetta Morgan, a former associate director at the bureau who started there in 2022 and resigned right after Trump\u2019s second inauguration. She added, \u201cThere are a number of big bank lobbyists who have had it out for the CFPB from Day 1.\u201d<\/p>\n
But most recently, some in the tech world \u2014 including those who have become particularly influential with the Trump administration \u2014 have been its loudest critics.<\/p>\n
Musk, who leads the administration\u2019s Department of Government Efficiency (DOGE) effort, posted \u201cRIP CFPB\u201d on X on Sunday. Andreesen, co-founder of venture capital firm Andreesen Horowitz, said on a podcast last year that the agency had been \u201cterrorizing financial institutions.\u201d Part of his criticism has centered around \u201cdebanking,\u201d something that the CFPB itself also tried to stop. (In 2021, the CFPB shuttered a lending startup backed by Andreessen Horowitz.) <\/p>\n
\u201cThe CFPB works for regular people that don\u2019t run in Elon\u2019s circle,\u201d said one current CFPB employee, who was granted anonymity out of fear of reprisal. \u201cElon doesn\u2019t know single mothers whose cars break down and are scammed by predatory car lenders. He doesn\u2019t know what it\u2019s like to be driven into debt by overdraft fees. He doesn\u2019t have a mortgage he is struggling to pay off. So he can\u2019t understand why the CFPB is so important to protect regular folks from being scammed.\u201d <\/p>\n
Compared with the vast resources historically commanded by the Justice Department\u2019s antitrust division, not to mention the Federal Trade Commission \u2014 the agency traditionally tasked with enforcing consumer regulations \u2014 the CFPB\u2019s remit was always relatively limited in scope. Notably, its annual budget has never exceeded $1 billion. <\/p>\n
It is thus perhaps not surprising that it never landed a proverbial knockout blow that would stick in the minds of the American public. Still, it steadily gained a favorable reputation. In 2015, Time magazine devoted a major feature to the bureau under the headline, \u201cThe Agency That\u2019s Got Your Back.\u201d <\/p>\n
Margetta Morgan, the former CFPB associate director, said eliminating medical debt from credit reports has been particularly significant.<\/p>\n
\u201cWhen CFPB started digging in on medical debt, it was astounding to see the extent to which consumers had inaccurate medical debt on their credit reports and then were being hounded by debt collectors over them,\u201d she said. \u201cI think the medical debt rulemaking was huge, and we saw that when we spoke to individual consumers.\u201d<\/p>\n
Yet as early as 2017, conservatives were charting a path to end the agency altogether. An article that year published by the Heritage Foundation \u2014 the group whose Project 2025 now appears, despite some Trump assurances to the contrary, to be driving much of his second administration\u2019s rollout \u2014 laid out the case against the CFPB\u2019s very existence.<\/p>\n
\u201cThe Consumer Financial Protection Bureau is arguably the most powerful and unaccountable regulatory agency in existence,\u201d the article\u2019s authors wrote, arguing that its rulemaking ultimately restricted Americans\u2019 access to credit while \u201ceroding their financial independence\u201d and posing concerns about due process and separation of powers. <\/p>\n
Instead, they said, consumers would enjoy the same protections if the agency\u2019s powers were swept back into the Federal Trade Commission and if existing state and local laws were enforced, they said. <\/p>\n
One of the authors, Norbert Michel, today a vice president at the pro-free-market Cato Institute, told NBC News that assuming that malfeasance is taking place \u2014 something he said there is often disagreement about \u2014 enforcement powers already exist at multiple government agencies, not to mention at the state level, to address it.<\/p>\n
\u201cIn one sense, you\u2019ve given a new federal agency extreme discretionary power \u2014 and in other sense, done nothing new,\u201d Michel said. \u201cSo somewhere in there you have an increase in government authority that\u2019s not necessary.\u201d<\/p>\n
Still, the agency persisted and became particularly active under Rohit Chopra, a Biden appointee, who helped bring actions against many major lenders, as well as financial technology firms and loan servicing groups. <\/p>\n
Chopra\u2019s largest action came against Wells Fargo, which paid a $1.7 billion penalty over accusations it improperly repossessed cars and froze customers\u2019 accounts. Chopra also engineered a settlement with Navient, formerly among the nation\u2019s largest student-loan servicers, over allegedly abusive practices. <\/p>\n
Yet it was the agency\u2019s recent work around so-called financial technology enterprises that may have created the conditions for its demise. In 2023, it sought to subject large fintech players like PayPal and Venmo to the same supervisory examination process as banks.<\/p>\n
Since that time, Musk has made clear he hopes to turn X into a payments platform. X recently announced a deal with Visa to begin processing payments. <\/p>\n
\u201cYou have Silicon Valley VCs not wanting any oversight of their businesses, many of which are premised on the idea that [financial technology] somehow is new and different and thus not subject to traditional consumer protections,\u201d said another current CFPB employee who spoke on the condition of anonymity.<\/p>\n
Last year, the Supreme Court heard the first challenge to the CFPB\u2019s very existence \u2014 and decided in its favor, with Justice Clarence Thomas, viewed as among the court\u2019s most conservative members, writing for the 7-2 majority that Congress had been clear in setting up its funding mechanism as a body of the Federal Reserve. <\/p>\n
That did not stop the chorus of voices calling for the agency to be reined in. Notably, the Heritage Foundation\u2019s Project 2025 referred to the CFPB as little more than \u201ca shakedown mechanism to provide unaccountable funding to leftist nonprofits politically aligned with those who spearheaded its creation.\u201d<\/p>\n
\u201cThe CFPB is a highly politicized, damaging, and utterly unaccountable federal agency,\u201d Robert Bowes, an official in Trump\u2019s first administration, wrote. \u201cIt is unconstitutional. Congress should abolish the CFPB.\u201d Consumer protection functions, he said, should be returned to banking regulators and the Federal Trade Commission.<\/p>\n
For consumer advocates, such an outcome would be cataclysmic for everyday Americans. <\/p>\n
\u201cThe CFPB protects real people from financial companies ripping them off,\u201d said Erin Witte, director of consumer protection at the Consumer Federation of America, a nonprofit group. \u201cIf your car has been illegally repossessed by a bank, or if you\u2019ve been the victim of a predatory student loan servicer, or ever had to pay junk fees, the CFPB steps up to make sure a company can\u2019t rip you off.\u201d<\/p>\n
Its potential elimination, Witte said, will have \u201cdisastrous consequences\u201d and should be \u201cinfuriating\u201d to almost everyone. <\/p>\n<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
When the Consumer Financial Protection Bureau made an appearance in the Heritage Foundation\u2019s Project 2025 blueprint, the conservative group\u2019s plan was simple: Abolish it entirely. Now, with a Project 2025 co-author in charge of the…<\/p>\n","protected":false},"author":1,"featured_media":3822,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[115],"tags":[],"class_list":["post-3821","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/posts\/3821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/comments?post=3821"}],"version-history":[{"count":0,"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/posts\/3821\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/media\/3822"}],"wp:attachment":[{"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/media?parent=3821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/categories?post=3821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/invest360pro.com\/index.php\/wp-json\/wp\/v2\/tags?post=3821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}