Trump versus Consumer Protection

US President Donald J. Trump, along with top advisor Elon Musk, who is leading the Department of Government Efficiency (DOGE), are dismantling the Consumer Financial Protection Bureau (CFPB). The Wall Street Journal reports that the agency faced many challenges to its existence in its short life. On March 3, 2025, the tension will come to a head at a hearing that is the result of testimony from the CFPB union of employees, who say the agency is being shut down illegally. 

This most recent challenge to the CFPB began as the Trump administration took office in the US, and DOGE began its work. 

"We virtually shut down the out-of-control CFPB, escorting radical left bureaucrats out of the building and locking the doors behind them," said Trump, according to 60 Minutes. 

Meant to protect consumers from fraud, the agency took complaints about corporate misdeeds and malpractice. Then, it took action in the form of litigation on behalf of consumers. 

What is the CFPB?

"These companies would want a situation where the agency is a lap dog rather than a watchdog," said Rohit Chopra, the former director of CFPB, in a news segment on the TV news magazine 60 Minutes. Chopra was director until February 1, 2025, when DOGE forced him out.

As of December 3, 2024, the agency reported providing more than US$21 billion in monetary compensation, principal reductions, canceled debts and other consumer relief. More than 205 million consumers benefited from the relief gained as a result of CFPB's enforcement and supervisory work.

The CFPB estimated that consumers would save $6.1 billion because of recent changes in banks' overdraft and non-sufficient funds (NSF) fee policies, which was a result of the agency's work. The CFPB had fielded 6.8 million customer complaints, including more than 4.6 million about credit reporting, more than 83,000 about medical debt collection and more than 96,000 about student loans.

Rooting out unfair and abusive practices, enforcing laws, including those that outlow discrimination in consumer finance, taking consumer complaints, educating people on finances, researching the customer experience of using financial products and monitoring financial markets for new risks to consumers are the duties of the CFPB, according to its website. In an interview with PBS News Hour, Chopra explained why expunging the CFPB was a grave mistake. 

"The actions that have been taken by the debt collectors who are illegally collecting on medical debt against companies like Capital One, which have been withholding billions of dollars in interest, credit reporting companies who have tarnished credit reports improperly due to errors, these are things that people of every political stripe want to protect themselves against. Often, consumers do not have much power against some of the biggest corporations in America and that is what the CFPB does to level the playing field." 

Elon Musk and DOGE focus on the CFPB

The CFPB is one among many US agencies facing potential shutdown by DOGE, which is meant to be focused on cutting government waste and inefficiency. Since Trump took office in January, DOGE has been going from agency to agency, making layoffs and sometimes drastic cuts. In fact, many reporters and comedians have started using DOGE as a verb as in "The agency is being DOGEd this week." CFPB has been a big target. 

Musk simply posted on X: "CFPB R.I.P." The reporting by 60 Minutes mentioned how Musk is moving into the space of digital payments, an area that CFPB would monitor, so there was already one conflict of interest. It was just one red flag for the CFPB. 

Eric Halperin and Lorelei Salas, the highest ranking civil servants to leave the agency, are concerned about the fact that Musk and the young men working for him in DOGE have "unprecedented access to the CFPB data systems," including senstive bank records. Usually, to gain entry, professionals working for the agency must go through special training and background checks.

"I'm worried about your account number, your social security number being out there," Salas said. 

In addition, the two explained that many banks, for instance, create models that they use to make decisions about whether someone should get a loan, and those algorithms are in the CFPB system. These would be of interest to Musk as he ventures into digital payments. That's not the only reason.

Recently, tech reporter and bestselling author Kara Swisher suggested on The Bulwark that Musk may have interest in gathering data, particularly algorithm data of other tech companies, banks, etc. because it can help him get a leg up on the competition in the artificial intelligence space. Once friends, Musk and Sam Altman, CEO of the billion-dollar artificial intelligence research company OpenAI, are in a public feud. The two have been trying to one up each other for some time now. With the levers of government handy, Musk could have a distinct advantage. In that same interview, Swisher said Musk is not the superhero Iron Man but rather Thanos, a reference to the Marvel villain. 

The GOP's beef with the CFPB goes way back 

The CFPB has long been a target of Republicans. Senator Elizabeth Warren, an outspoken Democrat, led the creation of the CFPB in the wake of the 2008 financial crisis that came to be known as the Great Recession. The idea behind the agency was to consolidate the work that was previously done by disparate agencies. From its inception during the Obama administration, Republicans have critcized it for being unnecessary and repetitive. In the first Trump administration, in fact, Republican leaders asked for a $0 budget from the CFPB. 

Many Republicans also suggested that that agency was rogue because it received funding in a different way than others. Created in 2010, the CFPB funding was specified in the Dodd-Frank Wall Street Reform and Consumer Protection Act, and it meant the funding would be outside of congressional appropriations through quarterly transfers from the Federal Reserve as requested by the CFPB, according to CRS reports.

As a result, the narrative is that the CFPB was too far reaching and cost too much money to regulate corporations, and other agencies were already doing it. With Warren and Obama closely tied to the agency, Trump and the GOP saw this effort as "woke radicalism," according to 60 Minutes. 

"The CFPB has been an albatross of an agency. It's been unaccountable to Congress. It gets funding directly from the Federal Reserve. Most people don't know that. It basically shows up with a letter asking the Federal Reserve for hundreds of millions of dollars just so it can operate," said Republican congressman from Florida Byron Donalds on FOX Business. "It really is this leviathan of an agency that just goes from company to company without really any enforceability by law. They put out those memorandum to force corporate action when they don't even go through the Administrative Procedures act and Process Act...It was passed on a party line vote [by only Democrats]."

Donalds is not alone. Former Senator Pat Toomey of Pennsylvania referred to the agency as the "far left" during his tenure.  

"Arguably the most unaccountable agency in the history of the US federal government," he once said, as reported by the Wall Street Journal. 

CFPB employees take the Trump administration to court

The latest chapter in this saga is the result of the union of CFPB employees fighting back against the shutdown. The Supreme Court, in a previous ruling of seven to two had already established that the CFPB structure was constitutional, and Congress had voted to create and enable it. The argument of employees is that Congress is the only one that can shut it down. In addition, there are procedures about the amount of time employees have to be notified of layoffs and severance packages that are not in discussion.

Most importantly, Trump has given the green light to DOGE to close the CFPB. So far, it has laid off 200 probationary employees, which is the term for the agency's most recent hires. It has also told all other employees to pause operations indefinitely. 

On Feb. 9, Russ Vought, the recently confirmed director of the Office of Management and Budget and Trump-appointed acting head of the CFPB, wrote on X: "The CFPB has been a woke and weaponized agency against disfavored industries and individuals for a long time. This must end." 

Despite this social media post and previous statements by Trump himself, the administration says the CFPB will be streamlined and not closed entirely. The employees tell NBC News that this does not match with what they have been told in meetings about layoffs. 

Their impression was that Musk, Trump and DOGE planned to fire nearly all 1,700 employees while "winding down" operations, according to filings in the union case. In this latest reporting from NBC, the expectation was clear: 

“'My team was directed to assist with terminating the vast majority of CFPB employees as quickly as possible,' said an employee identified as Alex Doe, a pseudonym used out of fear of retaliation. 

"Doe said the plan from CFPB leaders and DOGE was to cut the bureau’s workforce in three phases. It would first eliminate probationary and term employees, then carry out a wave of about 1,200 layoffs, leaving a skeleton crew of a few hundred workers.

'Finally, the Bureau would reduce altogether within 60 to 90 days by terminating most of its remaining staff,' Doe said."

As 60 Minutes and others have reported, the employees are no longer working, all cases they were bringing forth - even those in advanced stages - are on pause. And the signage for the CFPB is no longer on the building of its Washington, D.C. headquarters. The workers testified, according to NBC, that the plan is to strip down the agency to the barest minimum staffing required under law, which would mean five CFPB employees would remain and could be folded into other regulatory agencies. 

In the days leading up to this showdown at the hearing, Warren has been ardently supporting the agency she helped launch. 

She has asked: "If the CFPB is not there examining these giant banks to make sure they are following the laws on not cheating consumers, who is doing that job?" 

Trump's moves to remove consumer protections

Trump's administration is threatening consumer protections all around. Recent reports, not to mention numerous lawsuits, suggest that the Federal Trade Commission's click-to-cancel law, which requires subscription companies to make it as easy as possible for their customers to close an account, is no longer being enforced. In addition, Trump's tariffs will impact consumers.

Afer promising to bring down the cost of eggs (and other groceries and essentials), the prices have skyrocketed enough that USA Today reports some are thinking about raising their own chickens. The United States Department of Agriculture (USDA), after all, has said the price of eggs will increase by more than 40 percent because of a number of factors, including the spread of bird flu, as health agencies and programs have also been virtually shuttered. 

As the federal government dismantles the CFPB, states are looking to shore up their services. However, many believe these actions will happen along party lines. 

"Experts say the uncertain future of the federal agency puts more pressure on state attorneys general and state financial regulators," according to Stateline. "Even though states have broad latitude in enforcing federal financial protections, advocates say they lack the might of the federal regulator. And partisan politics, along with existing budget shortfalls, means consumer enforcements will likely vary widely across the states."

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