What Is the Consumer Protection Financial Bureau? Will It Survive?
The Consumer Financial Protection Bureau (CFPB) is the federal agency responsible for protecting Americans against financial fraud and abuse by financial and non-bank entities. Over the past 15 years, it has returned billions in fraudulently obtained funds to consumers. However, the Bureau finds itself the new focus of the Trump Administration, with the potential for the CFPB to be eliminated.
Let's examine the details and the potential outcomes.
The History of the CFPB
The CFPB was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Passed to prevent the causes behind the 2008-09 financial crisis from occurring again, it filled the previous absence of government oversight on non-bank financial entities. This included targeting abuses by private student loan lenders, mortgage lenders, and payday lenders.
The CFPB has so far returned over $17 billion in financial fraud to consumers through refunds and issued billions more in penalties for predatory financial practices. It's also responsible for outstanding medical debt being excluded from consumer credit reports.
In addition to handling some 1.3 million complaints about 3,400 companies in 2023, the CFPB also oversaw the Federal Trade Commission's (FTC) enforcement activities regarding Regulation Z (the Truth in Lending Act or TILA), Regulation M (the Consumer Leasing Act or CLA), and Regulation E (the Electronic Fund Transfer Act or EFTA).
Other protections enforced by the CFPB include defending military members and veterans from predatory lenders, targeting junk fees charged by platform providers, and hitting Wells Fargo Bank with a $3.7 billion fine for draining customer accounts with fees and fake accounts. The CFPB can also be considered a deterrent for potential criminal activity due to its monitoring activities.
So why is the CFPB on the chopping block? Some companies have long denounced the regulatory oversight given to the CFPB. In addition, its funding comes directly from the Federal Reserve, instead of Congress. Republican members of Congress have accused the CFPB of thus being over-funded and lacking Congressional oversight.
Acting director of the Office of Management and Budget (OMB) Russell Vought, who played a significant part in the creation of Project 2025 and served as head of the OMB during Trump's first administration, recently labeled the CFPB as a "woke and weaponized" agency.
Elon Musk, who called for the end of the CFPB on his social media platform, X, and is attempting to take responsibility for curbing government spending through DOGE, is set to debut a new financial online tool with Visa called "xMoney" later this year. It advertises itself as a platform that "empowers anyone, anywhere, to make or collect fast and affordable cross-border payments without relying on traditional banks," including transactions involving crypto.
Chances for Survival
In what was termed a "shake-up," the CFPB headquarters in D.C. was closed and employees were told to stay home through February 14, 2025. Vought has also said the CFPB will not receive its next scheduled funding payment, saying it's "not reasonably necessary to carry out [the agency's] duties."
Legal challenges are sure to follow. As with USAID, Congress set up the CFPB, and the executive branch cannot unilaterally end federal agencies set up by Congress. At least, that is how it has worked historically, although the Trump Administration is seeking to expand executive power in order to cut federal spending. That will also be a matter resolved in court. Congress could end the CFPB at any time, reduce its funding, or end its arrangement with the Federal Reserve, but it has so far declined to do so.
Related Resources
- What Is the Consumer Financial Protection Bureau? (FindLaw's Consumer Protection Law)
- What Is Dodd-Frank and What Would Its Rollback Mean? (FindLaw's Law and Daily Life)
- Financial Protections: Credit, Banking, and Debt Relief (FindLaw's Consumer Protection Center)
