Gideon Tsoutsouris

8 May 2025

The Consumer Financial Protection Bureau (CFPB) was formed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in the aftermath of the 2008 housing market crash and subsequent recession. It was created with the purpose of protecting consumers in financial matters regarding loans, mortgages, credit cards, and bank accounts. Many consumers fell victim to deceptive adjustable-rate and subprime mortgages issued by banks prior to the recession, and the CFPB was created as part of the solution to these unethical practices. While consumer financial regulation existed prior to 2008, it was a subordinate aspect of already existing regulatory agencies, and the formation of the CFPB allowed for greater prioritization of consumer issues, consolidating these matters into a single agency. The agency primarily executes consumer financial laws and addresses consumer complaints over financial products and services on the market [1, 2]. Since 2010, the CFPB has recovered more than $21 billion for consumers abused by corporations and other bad actors [12]. However, President Trump has recently taken steps to stunt the bureau under his sweeping budget cuts and federal agency eliminations.

In early February, President Trump ordered all work and funding be halted at the CFPB. Elon Musk’s Department of Government Efficiency (DOGE) also deleted all of the bureau’s social media accounts. While the administration has recently claimed that there will continue to be a CFPB , their actions contradict this statement [10]. Previous statements from President Trump, Musk, and the Project 2025 agenda also indicate an intent to completely shutter the bureau [11, 12]. On February 7th, Elon Musk posted “CFPB RIP” to his social media platform, X, suggesting his intention to follow through with a bureau shutdown [16]. Although the agency has not yet been eliminated, its functionality has been significantly stunted. Following the complete stoppage of the CFPB’s activities, the U.S. has entered an era with even less consumer financial regulation and enforcement than before the 2008 financial crisis.

The effective shutdown of the bureau, if sustained and unremedied, will undoubtedly have disastrous effects on the financial rights of consumers across the country. Credit card companies will be permitted to charge excessive overdraft and late fees unbridled, banks will be able to charge junk fees for basic services, debt collector oversight will cease to exist, and banks may once again be able to participate in risky lending practices. Many of the safeguards that exist to protect against certain crimes, like hackers breaking into bank accounts, may also cease to exist with the dissolution of the CFPB. Already, around half a million complaints submitted by consumers remain unresolved amid the CFPB shutdown [12]. Additionally, Matt Stoller, the research director of the American Economic Liberties Project and author of the substack “BIG,” speculates that without the CFPB, future fintech companies, especially those with payment systems such as Meta, will essentially be able to operate as unregulated banks without necessary safety nets like FDIC insurance [6].

The dismantling of the CFPB has already begun to derail legal efforts, as many of the lawsuits currently being prosecuted by the agency—ones holding major financial institutions accountable—will cease to exist under this stop work order. Suits against large banks such as Wells Fargo and Chase Bank for negligence over hundreds of millions of dollars in fraud issues on Zelle have recently been dismissed amid the CFPB cuts. A case against Capital One for allegedly failing to pay more than $2 billion in interest payments to their customers was also dismissed [11]. The CFPB also prosecutes other institutions like credit bureaus and lending companies for violating regulations, which will now fail to be held accountable for wrongdoing. For example, the CFPB’s lawsuit against Vanderbilt Mortgage and Finance—a branch of Berkshire Hathaway—was dropped in late February. The lender was accused of violating the Truth in Lending act by pushing homebuyers into loans they could not afford [14]. This resulted in borrowers’ inability to pay back their loans, making them subject to fees, home repossession, and bankruptcy filings. Because of the CFPB cuts, these people are no longer able to receive reparations for Vanderbilt’s predatory lending practices.

This decision comes as a surprise, as much of Trump’s 2024 presidential campaign focused on lowering prices and advocating for American consumers. It seems quite contradictory to this message to shut down the agency which protects those same consumers’ financial rights. Then again, perhaps this should not come as a surprise, as the Trump administration has time and time again sided with big business over the country’s consumers. In another move to do so, Trump fired two of the five head attorneys at the Federal Trade Commission, an independent agency tasked with holding businesses accountable for anti-competitive practices and consumer abuses [15].

An even more important question remains: are these agency cuts even constitutional?

The National Treasury Employees Union sued the director of the Consumer Financial Protection Bureau, Russell Vought, for complying with Trump’s request to halt CFPB activities. The union claims that these actions are unconstitutional because they violate the principle of separation of powers between the branches of government. Congress created the bureau under the Dodd-Frank Act and has the authority to “set and fund the missions of the CFPB” —power not allocated to the executive branch [9]. Trump’s attempt to alter the funding, staffing, and operations of the bureau may violate this constitutional principle. On February 14th, U.S. District Judge Amy Berman Jackson ordered that funds not be cut off from the bureau, work continue, and that no employees be terminated until a decision has been made on the case in a future hearing. Judge Jackson essentially upheld this decision on March 28th by granting a preliminary injunction that would remain in place until the case has been adjudicated, effectively keeping the CFPB open and working until a final decision has been made [17]. The Trump Administration has filed to appeal the decision.

Despite the lawsuits and public outrage over the Trump Administration’s actions against the Consumer Financial Protection Bureau, they continue to implement policy that will hurt the financial rights of American consumers. The Administration recently fired 150 FDIC employees and reportedly intends to make further cuts to that agency [12]. The Federal Deposit Insurance Corporation protects consumers’ bank accounts up to $250,000 in the event of bank runs, and the looming threat of a FDIC shutdown does not bode well for Americans’ financial rights.

For over a decade the CFPB has protected consumers and suppressed predatory financial practices, many of which contributed to the Great Financial Crisis. This is an independent institution which Americans need for their financial security, and therefore must remain intact. While Trump’s decision to dismantle the Consumer Financial Protection Bureau threatens lasting harm to consumers by enabling institutions to engage in deceptive financial practices, the intervention of a federal court is a promising sign that there may be constitutional grounds to combat Trump’s attempts to eliminate consumers’ financial rights.

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Works Cited

[1] “Federal Register : Agencies – Consumer Financial Protection Bureau.” Federal Register. Accessed April 6, 2025. https://www.federalregister.gov/agencies/consumer-financial-protection-bureau.

[2] “Consumer Financial Protection Bureau (CFPB): Usagov.” Consumer Financial Protection Bureau (CFPB) | USAGov. Accessed April 5, 2025. https://www.usa.gov/agencies/consumer-financial-protection-bureau. 

[3] Beggin, Riley. “Trump Administration Halts Work at Fraud-Fighting Consumer Financial Protection Bureau.” USA Today, February 9, 2025. https://www.usatoday.com/story/news/politics/2025/02/09/trump-vought-halt-consumer-protection/78371578007/. 

[4] Rugaber, Christopher. “Trump Administration Orders Consumer Protection Agency to Stop Work, Closes Building.” AP News, February 10, 2025. https://apnews.com/article/trump-consumer-protection-cease-1b93c60a773b6b5ee629e769ae6850e9. 

[5] “Trump Administration Closes the CFPB.” Economic Policy Institute, February 12, 2025. https://www.epi.org/policywatch/trump-administration-closes-the-cfpb/. 

[6] Stoller, Matt. “Monopoly Round-Up: On Ending the Consumer Financial Protection Bureau.” Web log. BIG by Matt Stoller (blog), February 9, 2025. https://www.thebignewsletter.com/p/monopoly-round-up-on-ending-the-consumer. 

[7] Rouzer, Stephen. “Unlawful Shut down of Consumer Agency Endangers Working Families, Honest Businesses, the Economy.” NCLC, February 10, 2025. https://www.nclc.org/unlawful-shut-down-of-consumer-agency-endangers-working-families-honest-businesses-the-economy/. 

[8] NATIONAL TREASURY EMPLOYEES UNION, et al. v. Russell Vought in his official capacity as Acting Director of the Consumer Financial Protection Bureau, et al., National Consumer Law Center (UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA 2025).

[9] NATIONAL TREASURY EMPLOYEES UNION v. RUSSELL VOUGHT: COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF (THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA February 9, 2025).

[10] O’Donnell, Katy. “‘There Will Continue to Be a CFPB’: Trump Administration Says It Won’t Shut Bureau.” Politico, February 25, 2025. https://www.politico.com/news/2025/02/25/cfpb-remaining-trump-administration-says-00205913 

[11] Gillison, Douglas. “Trump Admin Drops 5 Consumer Watchdog Cases, Including Capital One | Reuters.” Reuters, February 28, 2025. https://www.reuters.com/legal/us-cfpb-drops-enforcement-action-against-capital-one-2025-02-27/.

[12] Fellowes-Granda, Lilith, and Alexandra Thornton. “The Trump Administration Is Hurting Consumers’ Wallets by Kneecapping the CFPB.” Center for American Progress, July 1, 2024. https://www.americanprogress.org/article/the-trump-administration-is-hurting-consumers-wallets-by-kneecapping-the-cfpb/. 

[13] Cowley, Stacy. “Left for Dead, the C.F.P.B. Inches Back to Life.” The New York Times, March 15, 2025. https://www.nytimes.com/2025/03/15/business/trump-cfpb.html. 

[14] “US CFPB Dismisses Lawsuit against Berkshire Unit over Risky Home Loans | Reuters.” Reuters, February 27, 2025. https://www.reuters.com/legal/us-cfpb-dismisses-lawsuit-against-berkshire-unit-over-risky-home-loans-2025-02-27/. 

[15] Fadel, Leila, and Obed Manuel. “The Federal Trade Commission Keeps Tabs on Big Business. Trump Fired 2 of Its Members.” NPR, March 20, 2025. https://www.npr.org/2025/03/20/nx-s1-5333640/ftc-trump-firings-democrats. 

[16 ]Musk, Elon. “CFPB RIP.” X, February 7, 2025. https://x.com/elonmusk/status/1899149509407473825. 

[17] “Federal District Court Issues Preliminary Injunction Protecting CFPB Employees.” NTEU, March 31, 2025. https://www.nteu.org/blog/2025/03/31/CFPBemployees.