Trump's Latest Target: The Consumer Financial Protection Bureau

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Speaker 4 Hey there, it's the NPR Politics Podcast. I'm Asma Khalid.
I cover the White House.

Speaker 3 I'm Susan Davis. I cover politics.

Speaker 4 And today on the show, we are looking at the possible demise of the Consumer Financial Protection Bureau known as the CFPB.

Speaker 4 Over the weekend, the Trump administration ordered the agency to stop working and shut its headquarters.

Speaker 4 And to make sense of what this all means, we are joined on the show today by a special guest, Laurel Walmsley.

Speaker 5 Hey there, Laurel.

Speaker 4 Hello. So, Laurel, you cover personal finance for us here at NPR, and I want to start with you.

Speaker 4 For people who are not familiar with the Consumer Financial Protection Bureau, can you describe what this agency does?

Speaker 5 Yeah, it's been around for about 14 and a half years now, and it is the consumer finance watchdog agency for the country. So it's part of the Federal Reserve System and it's funded through that.

Speaker 5 It is really the only agency whose mandate is to work on behalf of consumers to make sure that they are not being abused by banks, but also non-bank institutions.

Speaker 5 You know, they were formed in the wake of the financial crisis in 2008, you know, where there was a lot of looking at how can we make sure that this doesn't happen again?

Speaker 5 And there are new rules coming in about mortgages and subprime mortgages, that kind of stuff. So they do stuff like that, but they do rulemaking is part of what they do.

Speaker 5 So they have recently, you know, made rules capping credit card fees and late credit card late fees, stuff like that, or that medical debt can't be on your credit report.

Speaker 5 But they also do enforcement. And so part of what they do is they have these examiners, I think they're called.

Speaker 5 They've got staff who go out to companies and make sure that they are following the laws that are in place. But they also like, they have a complaint line.

Speaker 5 People can literally submit complaints when they think that they've been wronged or like they've been slapped with a fee that they never heard about before.

Speaker 5 And the CFPB will look into it and often get their money back.

Speaker 4 What exactly happened over the weekend?

Speaker 5 Okay, there was a lot. One of the first things that happened was on Friday, members of Elon Musk's government efficiency team showed up at CFPB headquarters and came in.

Speaker 5 They'd been added to the directory there. And they also were able to gain access to, were granted access to, internal CFPB systems for stuff like human resources, finance, procurement.

Speaker 5 Russell Vogt was also named the new acting director of CFPB.

Speaker 4 Which we should point out, he's one of the main architects of the conservative blueprint known as Project 2025.

Speaker 5 That's right, in addition to being the newly confirmed director of the Office of Management and Budget.

Speaker 5 And no sooner was it clear that he had now taken over that he sent out an email with a pretty sweeping, essentially stop work order to staff at CFPB saying you really can't do any of the work that CFPB does.

Speaker 5 Shortly after that email, vote posted on X from his own account that he would not be asking the Federal Reserve for the next round of funding for the agency.

Speaker 5 And then on Sunday came word that CFPB's headquarters would be closed for the week. There was no reason given for that, but staff members were told to work from home.

Speaker 5 And then just this morning, there was another email that went out said, actually, stay at home, but don't work. Don't do anything.

Speaker 3 I think that it's important to remember that conservatives have been against the CFPB almost from the start.

Speaker 3 As Laurel noted, it was born out of the 2008 financial crisis under the Obama administration. And the architect, essentially, of the CFPB was Elizabeth Warren, who at the time,

Speaker 3 but at the time, she was an intellectual academic from Harvard who had come up with the framework for this program. And it really was supposed to be a regulation from the bottom up.

Speaker 3 There are obviously a ton of financial regulatory agencies that exist in the country of the SEC, the FDIC, but they're sort of top-down regulators.

Speaker 3 And as Laurel noted, this was an opportunity to give consumers some recourse if they felt like they were victims of predatory lending through their mortgages, through their credit card companies.

Speaker 3 And the CFPB will say they've actually been pretty successful by their own numbers.

Speaker 3 They say that in the 14 years since they were established, they've brought about $20 billion in consumer relief, that they've enacted $5 billion in civil money penalties, and that they say that they've provided some element of financial relief to 195 million Americans.

Speaker 4 So, how is that not popular with people, Sue?

Speaker 3 So, I think from the beginning, it was seen as a much more progressive populist idea of how you regulate the government.

Speaker 3 So, more free market conservatives, people that don't think that you need to add additional regulatory layers on top of a pretty complicated regulatory framework.

Speaker 3 I mean, conservatives just don't like regulatory agencies as a sort of a foundational view. And they felt that this one was redundant.

Speaker 3 I would also say it's important to note in this current political climate that a lot of tech companies really don't like the CFPB because the CFPB has also taken more aggressive action looking at digital payment systems that are used over platforms like Google, which is sort of new technology that CFPB has been looking at.

Speaker 3 So corporations don't like it because it adds another layer of regulatory fight that they have in their commerce. So it doesn't surprise me that Donald Trump took this action.

Speaker 3 This isn't like, oh, at one point, Republicans used to like this agency. Republicans have never liked this agency.

Speaker 3 From the conservative side, side, this is a big victory for something they've wanted from the beginning.

Speaker 4 So it also seems like what's happening with the CFPB

Speaker 4 is similar to what happened recently with USAID. Is it the same?

Speaker 3 I think it's same philosophically when you think about what Donald Trump's trying to do right now, which is sort of broadly remake the federal government and make it smaller and make it more conservative.

Speaker 3 I think there's a lot of distinctions, certainly between the missions of the two agencies.

Speaker 3 The point that Laurel made, too, that I think is worth just focusing on for a second is how the CFPB is structured and funded.

Speaker 3 I'm not an expert on this, but it is not funded through the annual appropriations of Congress. And that was by design.
They wanted to create a regulatory agency that was more independent.

Speaker 3 So if you weren't subject to constant congressional appropriations, you weren't affected by shutdowns, your work would not be influenced by Congress.

Speaker 3 A lot of members of Congress, especially Republicans in Congress, did like that because they felt like when you directly

Speaker 3 did not like it, because when you do directly appropriate agencies, you have more oversight over them.

Speaker 3 Legally now I think what's interesting in the contrast between USAID and CFPB, USAID was directly appropriated by Congress. That's part of the litigation fight that's going on right now.

Speaker 3 CFPB was funded by transfers from the Federal Reserve, which is just a different, unique system.

Speaker 3 And I have seen arguments that that will put the administration on better legal footing because it falls within the power within the executive branch.

Speaker 3 So in this instance, it's not really clear that Trump is defying Congress because Congress never appropriated any money for this agency. However, Congress did pass a law establishing the agency.

Speaker 3 So I think that will provide a basis for the legal fight.

Speaker 3 But I think that the Trump administration is on a different legal footing in at least being able to turn off the financial spigot for this one because it's controlled by the executive branch and not the legislative branch.

Speaker 4 Trevor Burrus: From my recollection, I mean, this was created as part of the Dodd-Frank Act in 2010. So isn't it in the law?

Speaker 3 The creation of the agency, yes. But to me, again, that's we're in this like weird, we've never been here before legal limbo.
Like he hasn't technically tried to shutter the agency.

Speaker 3 They've just kind of put it in suspended animation. I have no doubt that there's going to be some form of litigation against this.

Speaker 3 You're seeing this happen in all of these agencies, but how precisely they try to shut it down or not shut it down or how it affects the work, I don't think we entirely know just yet.

Speaker 4 All right, let's take a quick break and lots more to talk about in a moment.

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Speaker 4 And we're back. And Laurel, I want to understand what the impact is if CFPB goes away, if it disappears.

Speaker 5 I guess the first thing I would say is, even if it doesn't disappear, you know, it can sort of become a shell of itself, which is kind of what I feel like we're looking at right now, right?

Speaker 5 There's staffers, but they're not allowed to do anything. They can't make any rules.
They can't do any enforcement. You know, they can't put out any information to help consumers.

Speaker 5 All that kind of stuff that is core to the mission of the agency, they already aren't doing and are not allowed to do under Russell vote.

Speaker 5 So, you know, that's kind of what we saw during the first Trump administration. I mean, they also went after CFPB then.
And really, you know, there's sort of...

Speaker 4 This feels different than the first time.

Speaker 3 It does.

Speaker 5 I mean, I think you're seeing sort of the Elon Musk effect and probably also the Russell Vogt effect, right? Like they've got a plan this time to hamper it even further.

Speaker 5 But I think it's also possible to just make the entity not strong and able to do very much. I mean, they can go and change the rules that were made under the Biden administration.

Speaker 5 They can really gut what what the agency is set up to do.

Speaker 5 So, I mean, I think even if you don't destroy it, even if you don't give it any more funding, I mean, right now they're just going to start going through the reserve funds that they have there.

Speaker 5 But, I mean, I think a CFPB that can't do any of this stuff really, you know, you almost don't need to destroy it.

Speaker 3 I also think that to me, there's a politically interesting point here because Trump is moving so fast and doing so many things in government.

Speaker 3 But this is one where I think it has the risk of maybe going a bit too far in that a lot of what he's doing right now is like campaign promise made, campaign promise kept.

Speaker 3 And he wasn't campaigning on shutting down like the agency that helps consumers. This is arguably like a pretty working class type agency.

Speaker 3 Like if you've been wronged by your bank or your mortgage company, like this is the recourse for everyday citizens to go to the government and say, help me, like investigate this.

Speaker 3 And taking that away doesn't exactly fit with his other message of who he's fighting for and what he's about.

Speaker 3 It really does seem like it is much more a favor to the banking industry and the tech companies. Like it's helping people at the top and not people at the bottom.

Speaker 3 And I don't know if people have strongly held feelings about the CFPB. You might be able to get away with it that way.
Like people just might not know.

Speaker 3 But there has certainly been millions of Americans who have engaged with this agency and it's like where you could go if you had been wronged.

Speaker 3 And while there's certainly other financial regulatory institutions overlooking like the health of the financial sector in this country, If CFPB withers on the vine or closes down,

Speaker 3 there's nothing else. There's no other recourse for consumers at that level with that much power anywhere.

Speaker 3 So I think that it might start to have a ripple effect where, look, people still get kind of screwed over by their banks and their mortgage companies sometimes.

Speaker 3 Like that's not a solved problem in America. It might sort of recreate some of that anger.

Speaker 5 Yes. And CFPB staffers, you know,

Speaker 5 one who just left the agency told me that this is like taking the cops off the beat. I mean, they are like the frontline defense for consumers.

Speaker 5 And now we're just like telling this enforcement agency, don't enforce.

Speaker 5 And so, you know, there's a lot of concern from other consumer advocacy groups saying with the agency hampered in this way, it just leaves Americans super vulnerable to scammers and fraud and financial abuse.

Speaker 4 Well, there are legal challenges underway at this moment to try to keep the agency open. I mean, correct? What are those?

Speaker 5 Yeah, so there's two lawsuits so far.

Speaker 5 One of them, my understanding is that it's about the staff themselves and sort of like their employee records and stuff being just handed over to Elon Musk's team, that it's like putting them at risk.

Speaker 5 You know, their own health and financial information is now in the hands of that Doge government efficiency team. So there's concern there.

Speaker 5 And then the second lawsuit is that votes directives to not let them do their work

Speaker 5 is,

Speaker 5 you know, goes against, I think, what's been directed by Congress and that he can't do that essentially.

Speaker 4 Can't unilaterally shut the agency down.

Speaker 5 Yeah, because they are congressionally obligated to do the work that they're supposed to be doing.

Speaker 4 Sue, I want to ask you a big picture question.

Speaker 4 It feels like this attempt to, we could say, neuter CFPB is yet another move from the Trump administration that seems to mimic the Silicon Valley expression, move fast and break things.

Speaker 4 How likely is it that if these agencies get broken up, they could come back in some other form? I mean, in other words, if they die now, are they dead forever?

Speaker 3 That's a good question.

Speaker 3 And I think part of what bends towards the Trumpian view in this is that, yes, there is legal recourse, and yes, there is going to be a ton of litigation, and they're not done yet, right?

Speaker 3 Like, they're going to turn this on other agencies. Like, this is part of a bigger effort.
Litigation just takes a really long time.

Speaker 3 So, I don't know if USAID or CPFB, like, if all of this is resolved in the ways that people want to keep that institution, but if it takes two, three, four years, like, what's left?

Speaker 3 And how do you build it back up or how do you restaff it?

Speaker 3 So I think you can do an incredible amount of damage in a short period of time, especially if the will of the White House is really going to try to suffocate these agencies over the next four years.

Speaker 3 Whether they ultimately succeed in the end in unilaterally sort of closing them, I just don't know. I don't have that level of crystal ball.

Speaker 3 But I think that if it's going to be a four-year fight, like if the CFPB re-rise up again at some point, it could just take a long time.

Speaker 4 All right. Well, on that note, that is a wrap for today's show.
Laurel, thank you so much for joining us with all your reporting. Really appreciate it.
Thanks for having me. I'm Asma Khalid.

Speaker 4 I cover the White House.

Speaker 3 I'm Susan Davis, I cover politics.

Speaker 4 And thank you all, as always, for listening to the NPR Politics Podcast.

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