The Trump administration has effectively shut down the Consumer Financial Protection Bureau (CFPB) by ordering it to cease nearly all operations, including rulemaking, investigations, and communication with regulated entities. This move comes amidst ongoing tensions between the administration's populist agenda and its commitment to deregulation.
The Trump administration has ordered the Consumer Financial Protection Bureau ( CFPB ) to halt nearly all operations, effectively shutting down an agency created to safeguard consumers following the 2008 financial crisis and the subprime mortgage lending scandal.
This action, directed by the newly appointed director of the Office of Management and Budget via a Saturday evening email, instructs the CFPB to cease work on proposed regulations, suspend the implementation dates of finalized but inactive rules, and discontinue both existing investigations and the initiation of new ones. The CFPB has been a target of conservative criticism since President Barack Obama championed its inclusion in the 2010 financial reform legislation enacted after the 2007-2008 financial crisis. While the agency was established by Congress and its formal elimination would require a separate Congressional act, the agency's head possesses discretion over enforcement actions. Elon Musk commented 'CFPB RIP' on social media platform X on Friday, and the CFPB's homepage was inaccessible on Sunday, replaced with a 'page not found' message. Additionally, late Saturday, Vought announced on social media that the CFPB would not withdraw its upcoming funding from the Federal Reserve, stating that its current reserve of $711.6 million is 'excessive'. Congress mandated that the bureau be funded by the Fed to shield it from political influence. 'This spigot, long contributing to CFPB's unaccountability, is now being turned off,' Vought said on X. The CFPB asserts that it has secured nearly $20 billion in financial relief for U.S. consumers since its inception, encompassing canceled debts, compensation, and reduced loan burdens. Last month, the bureau filed a lawsuit against Capital One for allegedly misleading consumers regarding its high-interest savings account offerings, resulting in customers losing more than $2 billion in potential interest payments. Dennis Kelleher, president of Better Markets, an advocacy group, stated, 'that's why Wall Street's biggest banks and Trump's billionaire allies hate the bureau: it's an effective cop on the finance beat and has stood side-by-side with hundreds of millions of Americans — Republicans and Democrats — battling financial predators, scammers, and crooks.'The administration's move against the CFPB also underscores the tensions between Trump's more populist promises to alleviate costs for working-class families and his commitment to reducing government regulation. During the campaign, Trump pledged to cap credit card interest rates at 10% after they had surged to record levels exceeding 20% on average as the Federal Reserve increased interest rates in 2022 and 2023. The CFPB had commenced work on the implementation of this proposal. Despite the memo's restrictions, the bureau can still receive complaints but cannot conduct examinations or pursue existing investigations. Additionally, it appears to prohibit communication with regulated companies, consumer advocates, and external organizations. Musk's access to complaints, investigations, and regulatory oversight data raises concerns, particularly if Musk's company X launches a payments system, as the CFPB possesses data on competitors like Cash App. This development follows a similar directive from Treasury Secretary Scott Bessent on February 3rd and represents the latest move by the Trump administration to swiftly curtail the operations of federal agencies deemed excessive.
CONSUMER FINANCIAL PROTECTION BUREAU CFPB TRUMP ADMINISTRATION DEREGULATION GOVERNMENT AGENCIES FINANCIAL REGULATION
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