President Trump campaigned on providing economic relief to working Americans, promising to “drive down prices” on day one. His running mate, JD Vance, made his name with a message of economic populism, writing in his 2016 memoir that the nation needs “a leader who is not in the pocket of big business, but answers to the working man, union and nonunion alike.” It’s striking, then, that the administration is attempting to shutter the Consumer Financial Protection Bureau (CFPB), the federal agency whose mission is to protect consumers from the sort of deceptive and abusive financial practices that led to the 2008 financial crisis, in which millions of Americans lost their homes and life savings.
This raises the question: What is really driving the effort to shutter the CFPB?
From the perspective of the finance industry and its allies, some of whom have made no secret of their disdain for the CFPB, the agency’s consumer protection activities impose unacceptable costs on business. Donors from the broader financial services industry, including hedge funds and investment banks, spent hundreds of millions of dollars supporting Trump’s presidential bid, and some have now taken on prominent administration positions. Other Trump donors, including Department of Government Efficiency head Elon Musk, have also made it plain that they see the CFPB as an impediment to their business interests.
The CFPB was created to protect against the sort of risky lending practices that helped bring about the biggest market collapse since the Great Depression. During the 2008 crisis, millions of Americans saw their homes foreclosed, and according to one study, a quarter of American families lost at least 75 percent of their wealth. Today, the CFPB has broad jurisdiction over financial products and services marketed to consumers by traditional banks and credit unions, mortgage lenders, credit reporting agencies, debt collectors, auto and student loan companies, and money transfer services. Since its creation, the agency has been an energetic regulator, investigating consumer complaints, creating new rules to ensure better transparency and prevent fraudulent and predatory practices, fining companies for violations, and helping educate the public about financial matters like mortgages and credit scores. The agency estimates that it has returned almost $20 billion to American consumers.
But representatives of the industries the CFPB regulates have often bristled at its interventions. Some of these objections appear to be ideological. Conservative advocates have argued that CFPB wields too much power and blamed it for businesses being “harassed, hectored, and micromanaged” by overzealous regulators. Hedge fund Elliott Management wrote in a 2017 letter to investors, “The financial system needs to be freed from the dysfunctional dictates” of Dodd-Frank, the legislation that created the CFPB. Venture capitalist Marc Andreessen has accused the agency of “terrorizing financial institutions.”
Ideology aside, some of the biggest pro-Trump spenders in the election also have more practical reasons to want the CFPB sidelined or eliminated. Elon Musk was the biggest pro-Trump spender, with at least $270 million funneled through super PACs. Musk’s electric car company, Tesla, has a financing arm that extends auto loans to buyers. While the CFPB received hundreds of complaints about its debt collection and loan practices, pending investigations will not proceed under the administration’s order to stop all supervisory activities. The CFPB also would have reviewed Musk’s new effort to integrate peer-to-peer payments into his X social media platform.
Musk is hardly alone. Elliott Management head Paul Singer, who spent $7.5 million supporting Trump’s reelection bid, has invested in financial companies regulated by the CFPB, including one with more than 5,000 consumer complaints in the agency’s database. A firm run by Andreessen and Benjamin Horowitz, who together gave $7 million to pro-Trump super PACs, invested in a payday lending company called LendUp, which the CFPB slapped with tens of millions of dollars in fines for predatory lending practices. Warren Stephens, a $3 million Trump booster who runs investment bank Stephens Inc, held a major stake in another payday loan company, Integrity Advance, that was sued for predatory lending by the CFPB in 2015 and ordered to pay millions in fines.
The administration’s opposition to the CFPB is based on claims that it is a “woke, weaponized” agency that takes money from financial institutions to “support radical advocacy groups.” This position is drawn directly from the conservative policy plan Project 2025, which was crafted in part by Russell Vought, Trump’s Office of Management and Budget director and acting CFPB head.
The White House’s position appears to be based on unsubstantiated allegations that the recipients of some small grants supporting community financial literacy education are “radical” groups. But even if there were any truth to this narrative, it’s hard to understand how these claims justify completely shuttering the CFPB. Indeed, a number of the president’s stated priorities, like capping credit card interest and cracking down on the practice of “de-banking,” fit squarely within the CFPB’s mission. Nor would the agency’s cost, which is only $750 million per year, have a meaningful impact on the federal budget.
The Trump-Vance ticket ran on breaking with the economic orthodoxy espoused by longtime GOP megadonors. But for now, it appears to be the orthodoxy that is winning out.
