Column: Trump’s move to kill federal consumer watchdog will protect Big Business but cost consumers billions

Back in 2018, during Donald Trump’s first term, his appointed director of the Consumer Financial Protection Bureau, Mick Mulvaney, gleefully described his plan to emasculate the bureau by bringing the financial firms victimizing Americans under its protective umbrella.

“We are there to help protect people who use credit cards,” he told an appreciative audience of credit union executives. “We’re also there to help and protect the people who provide that credit…. We are there to help people who borrow money; but we’re mindful and respectful of the people who provide those loans.”

Mulvaney couldn’t resist taking a swipe at Sen. Elizabeth Warren (D-Mass.), who had conceived of the CFPB and acted to create it as part of the Dodd-Frank financial reform act of 2010.

“I am the acting director of the CFPB,”he said, “something that’s apparently keeping Elizabeth Warren up late at night, which doesn’t bother me at all.”

Mulvaney isn’t part of the current Trump administration, but his successors as the Trump-appointed overseer of the CFPB have taken his approach much further. Rather than direct the CFPB staff to be more solicitous of the financial services firms that the bureau is charged with regulating, they’ve completely shut the bureau down.

Acting CFPB director Russell Vought, in an email reportedly issued Monday, instructed all the bureau’s employees to “stand down from performing any work task.” The bureau’s Washington headquarters building has been closed and will remain shuttered at least until Friday. Vought was an author of the right-wing Project 2025 blueprint for an incoming Trump administration.

Anyone clicking on the bureau’s home page as recently as Monday was greeted by a messaage indicating the page couldn’t be found, along with the image of an electric plug dangling uselessly next to a power outlet.

Vought’s order puts on indefinite hold all the CFPB’s enforcement and investigative activities. It reflects what has emerged as the Trump administration’s approach to governing, which has instilled chaos in the workings of the U.S. Agency for International Development and other federal agencies whose funding has been frozen. Rather than trying to redefine an agency’s purposes and goals, it’s so much easier to simply stop them from working at all.

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That brings us to the reasons for Republican and conservative hostility toward the CFPB.

“The CFPB targets financial predators, lawbreakers and crooks,” says Dennis Kelleher, co-founder and chief executive of the financial services watchdog Better Markets. “That’s why Wall Street and its allies in the Trump administration and the Republicans on Capitol Hill have been fighting the CFPB from the beginning. It’s powerful and it’s effective, and it’s forced them to give back the money they rip off.”

“Financial rip-offs don’t just rip off Democrats or Republicans,” Kelleher told me. “They rip off anybody and everybody.” Every CFPB case is directed at helping “hard-working Main Street American victims. They’re the ones who need a Consumer Financial Protection Bureau to stand next to them.”

Curiously, the Trump White House seems to think that protecting Main Street Americans from rip-offs is an argument for the bureau’s extinction. In defending its shutdown, the White House issued a release Monday headlined, “CFPB Isn’t a Wall Street Regulator, It’s a Main Street Regulator.” Most people might regard that as a compliment rather than a criticism.

The release called the bureau “another woke, weaponized arm of the bureaucracy that leverages its power against certain industries and individuals disfavored by so-called ‘elites,’” though it didn’t specify those industries or individuals or the “elites” that supposedly have it out for them. The White House didn’t respond to my request for details.

One can put numbers to the bureau’s “wokeness” and “weaponization.” According to its latest financial report, from its inception in 2012 through Jan. 30, the bureau had returned $19.7 billion to 195 million people, via actual compensation from financial firms, reductions in loan principal and canceled debts. It also collected $5 billion in civil penalties.

The bureau’s partisan critics haven’t effectively challenged these figures. Rather, they’ve ginned up accusations that the bureau had used legal settlements to accumulate a “slush fund” — meaning its Civil Penalty Fund — to “provide unaccountable funding to leftist nonprofits.” That language comes from the Project 2025 chapter on the CFPB.

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As it happens, the project’s footnoted source for the charge, a 2015 article from the conservative Investor’s Business Daily, appeared before the penalty fund had actually come into existence and obviously before it had disbursed a dime.

Project 2025 noted that the Civil Penalty Fund was created both to provide money to compensate victims of financial rip-offs and to fund programs in financial literacy and consumer education. It asserted that the bureau had been “unclear as to how it decides which of those latter programs to fund,” insinuating that the money is being diverted to partisan allies. It cited a report by the Government Accountability Office to back up its claim that the agency had been “unclear.”

The GAO report, however, stated that the bureau “has written policies that describe roles and the process related to making allocations to consumer education and financial literacy programs.” It did say that the factors in its policy decisions hadn’t been documented for the first six months of the fund’s existence. In any case, the GAO did conclude that the “primary purpose” of the fund was to compensate victims of financial wrongdoing.

Big Business tried to hamstring the bureau with lawsuits that eventually made their way to the Supreme Court. The first asserted that the bureau’s management structure, with no board and a single director who could be removed by a president only for inefficiency or malfeasance, was unconstitutional. The court agreed, which is why Trump was empowered to fire the bureau’s Biden appointed director, Rohit Chopra, as he did Feb. 1.

The second case challenged the bureau’s funding, which comes from the Federal Reserve, not directly from Congress. That argument was shot down last year in a 7-2 decision written by Justice Clarence Thomas, who found that the bureau’s funding procedure was perfectly legal and constitutional.

The bureau’s foes have resorted to ginning up dubious claims that some of its rules “may actually hurt ... the people you’re trying to help,” as Sen. Katie Britt (R-Ala.) told Chopra at a Senate Banking Committee hearing in December. Chopra crisply countered this absurd claim by noting that just the previous week, the bureau had sent $38 million to 93,000 of Britt’s own constituents “involved in a very harmful scam.” He didn’t identify the scam.

Compensation has been paid to residents of every state, according to CFPB data on disbursements through the end of October, ranging from $6 million paid to residents of North Dakota and Wyoming, to $317 million paid to residents of Texas.

It’s obvious whose ox has been gored by the CFPB: Banks accused of ripping off depositors and mortgage borrowers, such as Wells Fargo, which agreed to pay $3.7 billion in compensation and penalties in 2022, for allegedly misapplying consumer loan payments, wrongfully foreclosing on homes and repossessing vehicles, and charging surprise overdraft fees. (The bank didn’t admit or deny the charges.) “Credit repair” agencies, credit reporting firms and other lenders and loan serving firms have also ended up in the bureau’s sights.

The bureau’s most dangerous enemy may be Elon Musk, who has infiltrated the executive branch at Trump’s invitation. Musk’s DOGE minions are in place at the CFPB, according to Bloomberg. On Feb. 7, he posted a tweet that read “CFPB RIP,” next to an emoji of a tombstone. What’s his beef? It isn’t clear, but Musk’s ambition to turn his X, formerly Twitter, into a digital payment processing service might bring it within the bureau’s jurisdiction. (I reached out to Musk via SpaceX, his spacecraft company, but haven’t received a response; X doesn’t have a portal to receive press media inquiries.)

When Mulvaney took over the CFPB in 2018, he suspended a regulation, five years in the making, aimed at preventing payday lenders and other profiteers from lending to customers who can’t repay the loans, running up fees on customers, and engaging in other abuses. He abruptly withdrew, without explanation, a federal lawsuit against four allegedly abusive installment lenders. And he closed an investigation into World Acceptance Corp., a payday lender in his home state of South Carolina that had been accused of abusive practices, but had contributed at least $4,500 to Mulvaney’s congressional campaigns.

“For the record, decisions to complete bureau investigations are made in the normal course by career enforcement staff, not the Director, and that is what occurred in this instance,” a CFPB spokesman said at the time. “Any suggestion that Acting Director Mulvaney had any role in the decision is simply inaccurate.”

Numerous CFPB rulemaking cases and lawsuits alleging financial wrongdoing hang in the balance today. On Jan. 14, for instance, the bureau sued Capital One for allegedly misleading depositors about the interest rates they were entitled to on their accounts. Capital One hasn’t responded to the bureau’s charges, though it has asked a federal court to consolidate the case with private lawsuits making similar allegations. The bank declined to comment specifically on the CFPB lawsuit.

It’s probably unwise to expect that the Capital One lawsuit will stand once Vought or his bosses start examining pending rulemakings and legal cases on the CFPB’s docket. The Trump-era CFPB won’t resemble the bureau that Chopra headed during the Biden administration, when he was roundly flayed by the U.S. Chamber of Commerce as “out-of-control,” “ideologically driven,” “radical,” “extreme” and “heavy-handed.”

Those words were bankers’ terms for what consumers might describe as “effective.” Now the shoe will be on the other foot. Bankers and other financial service firms will get a green light to treat their customers any way they please. Consumers will have to watch their wallets, because there won’t be much, if any, consumer financial protection coming from the federal government.