Trump shuts down agency charged with protecting consumers from financial industry abuse

President Donald Trump’s administration has unilaterally shut down the operations of the Consumer Financial Protection Bureau, the federal agency responsible for enforcing laws that protect customers from abusive practices by big banks and other financial institutions. 

According to its website, since the CFPB’s creation 14 years ago, it has delivered more than $21 billion in “monetary compensation, principal reductions, canceled debts, and other consumer relief resulting from CFPB enforcement ($19 billion) and supervisory ($1.7 billion) work.” It has imposed $5 billion in civil penalties, which have gone into a victims relief fund that goes to those harmed by companies that break federal consumer financial protection laws, and saved consumers an estimated $6.1 billion annually in bank fees.The victims relief fund returned $1.8 billion to victims of deceptive advertising by credit repair companies and $384 million to consumers tricked by an online lender into repaying loans they did not owe.

Neither the CFPB nor the White House responded to requests for comment for this story.

What is the CFPB?

In the aftermath of the 2008 collapse of multiple Wall Street firms and the resulting global financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Protection Act of 2010 to increase oversight of financial services companies and to centralize enforcement efforts.  

“The CFPB governs rules that address almost every type of financial transaction a person might do, so whether it affects their bank accounts, their savings accounts, if they want to take out a mortgage and buy a home, all of those processes are overseen by rules set forth by the CFPB,” said Lilith Fellowes-Granda, associate director for financial regulation at the nonprofit Center for American Progress in a phone interview. “The CFPB also supervises financial institutions to make sure that they are actually following these consumer financial laws, and if they find that they aren’t, they will pursue enforcement actions against them.” 

“It’s one of the best examples of how government can work well,” Fellowes-Granda said.

“At its core, it’s a law enforcement agency,” Rohit Chopra, who served as CFPB director under President Joe Biden, told NPR on Feb. 10. “It takes big financial institutions to court who cheat consumers, whether it’s a credit reporting agency or a large bank or a credit card giant.”

How has Trump tried to eliminate the agency?

Trump and Republicans in Congress have long opposed the CFPB and have sought to eliminate it.

“I … think we have to get rid of Dodd-Frank,” Trump told Fox Business in 2015. “The banks aren’t lending to people that need it. The banks are giving me all the money I need because I don’t need the money. Anybody that doesn’t need money is a great candidate today to get money. … The regulators are running the banks and that’s why … people can’t borrow money today.”

During his first term in office, Trump proposed significant cuts to the agency, according to the site Housingwire. In February 2018, Trump’s acting CFPB director Mick Mulvaney wrote in a strategic plan, “If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.” That same quarter, Mulvaney requested zero dollars in funding for the agency, proposing to operate solely on reserves.

Since the start of this term, Trump and his team have gone even further, effectively halting the operations of the CFPB. According to a Feb. 10 NPR report, acting director Russell Vought shut down the agency’s headquarters and emailed staff: “Employees should not come into the office. Please do not perform any work tasks.” Much of the staff was placed on administrative leave.

Through their union, CFPB employees sued Vought in federal court, arguing in their complaint: “Congress created the CFPB in response to a financial crisis and assigned the CFPB its critical mission of protecting the American consumer. The efforts of Defendant Russell Vought, the CFPB’s Acting Director, to bring the CFPB’s statutorily prescribed work to a halt violate separation of powers principles.”

In a pair of affidavits in response to the case, CFPB chief operating officer Adam Martinez told the court that the bureau was still going to meet its statutory obligations.

On Feb. 4, the Substack publication Popular Information reported that it had obtained an email from CFPB principal deputy assistant director Cassandra Huggins expressly contradicting those claims, telling staff they could not resume “supervision/examination activity, even though the Bureau is required by law to carry out these activities.” 

The lawsuit is ongoing.

“It appears there’s nobody watching,” said Fellowes-Granda. “There’s no cop on the beat, and so we’re putting a lot of trust and a lot of power into these financial institutions to act in good faith. And I think examples from the financial crisis show that when banks and other financial institutions are left unsupervised, they will often do what will maximize their profits, even if that comes at the cost of Americans’ economic safety.”

What has the Bureau done for Michigan?

According to a September 2023 analysis by the Center for American Progress, the CFPB has significantly helped Michiganders since its inception.

It took action on more than 91,000 complaints from individuals in the state, including more than 4,900 from military service members and 3,300 from older Americans. The CFPB fielded over 20,000 requests for help correcting incorrect information on credit reports, 14,000 cases involving the improper use of credit reports, and 4,100 attempts to collect debts not actually owed.

Without a functioning bureau, consumers will be largely on their own. “A lot of people who don’t have a lot of resources are going to be hurt,” Adam Rust, director of financial services for the Consumer Federation of America, told Consumer Reports on Feb. 5.

“I think consumers should be very worried” if the agency is shut down, warned Fellowes-Granda. 

She noted that, since Trump’s inauguration in January, about 12,000 consumer complaints have been filed by Michiganders with the CFPB. It is unclear whether anyone will be able to address them.