The Trump-Musk Presidency is killing the CFPB

[ResidentialBusiness]

On Saturday, a little less than two weeks into his second term in the White House, President Donald Trump fired Rohit Chopra, who’d served as the director of the Consumer Financial Protection Bureau (CFPB) since October 2021. During his tenure, the Bureau oversaw the return of some $6 billion from financial services providers—banks, credit card companies, mortgage brokers, payday lenders, and so on—who defrauded, gouged, swindled, harassed, stole from, lied to, discriminated against, or otherwise harmed consumers in violation of federal law. In a letter announcing his departure, Chopra expressed hope that the Bureau would “continue to be a pillar of restoring and advancing economic liberty in America,” and wished Trump “good luck in serving our great country.”

The most surprising aspect of Chopra’s termination was that Trump waited so long to do it. Congress created the Bureau after the Great Recession to consolidate enforcement authority for consumer protection laws in a single, independent agency. And although Chopra had about a year and a half remaining in his five-year term, Republicans had anticipated that Trump would quickly move to replace him with a director more sympathetic to banking executives eyeing megayacht purchases. In November, shortly after Elon Musk announced the “Department of Government Efficiency” that is now setting fire to the civil service, he called for Trump to “delete” the Bureau posthaste. “There are too many duplicative regulatory agencies,” he said.

A firm belief in the villainy of the Bureau has become common of late not only among Wall Street behemoths who want to squeeze poor people for money they do not have, but also among Silicon Valley oligarchs eager to see their fintech and crypto startups compete with the traditional banking industry. Last fall, the CFPB probed allegations that Meta had improperly used personal financial data in its targeted advertising business; in response, during a recent interview on Joe Rogan’s podcast, Meta CEO Mark Zuckerberg suggested the emergence among regulators of a “quiet consensus” that tech companies like his needed to be brought to heel. In November, and also on Joe Rogan’s podcast, the venture capitalist Marc Andreessen accused the CFPB of “terrorizing anybody who tries to do anything new in financial services.” In a possibly related story, as Ryan Cooper at The American Prospect notes, in 2021, the CFPB ordered the closure of LendUp, a fintech startup, after determining that the company lied to customers about how they could qualify for better loan terms. Among LendUp’s backers: Google Ventures, PayPal Holdings, and Marc’s firm, Andreessen Horwitz.

Sure enough, on Monday, Trump named hedge fund manager Scott Bessent, whom the Senate confirmed as Secretary of the Treasury last week, as the CFPB’s acting director, pending Trump’s decision on Chopra’s permanent replacement. According to NPR, among Bessent’s first acts in his side gig was directing CFPB employees to stop doing anything—implementing new rules, taking enforcement actions, even communicating with the public—in order to “promote consistency with the goals of the Administration.” There is no subtext here: Republicans do not want to install a new person to lead the CFPB so much as they want to kill it. Trump’s return to the White House—and the elevation of Musk, an unelected billionaire with a rudimentary-at-best understanding of how government works, to the position of shadow president—is their best chance in years to do it. 

Since it opened in 2011, the Bureau has probably done more to rein in abuses of corporate power than any agency in recent memory, returning an estimated $20 billion to millions of consumers victimized by junk fees, predatory loans, and the like. (It was still busy a week before Trump’s inauguration, suing Capital One for allegedly bilking customers out of more than $2 billion in interest payments.) In an effort to shield the Bureau from regulatory capture, the Congress that created the CFPB limited the president’s ability to fire its director, allowing for removal only in cases of “inefficiency, neglect of duty, or malfeasance in office.” A consumer protection watchdog vulnerable to kneecapping by a president with no interest in protecting consumers, lawmakers reasoned, would not do much to prevent the industry from inciting another global financial crisis at its earliest convenience.

These statutory handcuffs have long infuriated Republican politicians, who argue that forcing usurious student lenders to comply with modest restrictions on their ability to saddle borrowers with late fees is an unconscionable constraint on their beloved free market. In a 2014 interview with an industry publication, then-Congressman Mick Mulvaney described the Bureau as a “joke” in a “sick, sad kind of way,” a sentiment shared by many of his Republican colleagues at the time.“I don’t like the fact that the CFPB exists,” he said in 2015; that same year, he co-sponsored legislation to abolish the Bureau altogether.

Although bills like Mulvaney’s never passed, the Bureau’s opponents started chalking up real victories during the first Trump administration. For starters, Trump appointed Mulvaney as the Bureau’s interim director in November 2017, a choice that is roughly analogous to me asking my dog to keep an eye on a 72-ounce porterhouse while I run to the store to pick up a nice bottle of red. Like Bessent, at the time of his promotion, Mulvaney already had a Senate-confirmed day job as director of Trump’s Office of Management and Budget; according to The New York Times, by June 2018, he was only going into the Bureau’s offices twice a week. Also like Bessent, Mulvaney set about the task of bringing the Bureau’s work to a grinding halt, asking courts to block the implementation of new rules and pausing or dropping some investigations, including a lawsuit against a lender that allegedly charged interest rates of up to 950%. Also among the probes the Bureau ended: one of a South Carolina-based payday lender whose political action committee donated at least $4,500 to Mulvaney when he was still in Congress. 

Then, in 2020, the Supreme Court’s five-justice Republican majority decided that those pesky firing protections created by Congress were unconstitutional. Although the justices rejected the more ambitious argument that the law compelled them to abolish the entire Bureau and strike down a decade’s worth of rules by judicial fiat, they made clear that going forward, presidents like Trump would be able to fire directors like Choprit whenever they felt like it.

Musk’s takeover of vast swaths of the federal government, however, is the most serious threat yet to the Bureau, and to anyone who aspires to live in a country in which financial institutions have to comply with laws that require them to treat customers fairly. When he called for its elimination, Musk characterized the Bureau as “duplicative” of other regulatory agencies—essentially framing its work as wasteful and unnecessary, and the notion of closing its doors as a straightforward matter of prudent administration and good governance.

But like every other institution that Musk is using DOGE to target, Musk’s conception of “inefficient” government spending is any government spending that does not align with his political ideology, or go into his pockets, or both. Musk has long aspired to make X, the social media platform he bought and ruined, into an “everything app” on which users can pay for purchases, transfer money to friends, and even earn interest on their account balance. Earlier this month, X rolled out a partnership with Visa that would allow it to dispense with onerous state-by-state bank licensing requirements and turn X Money into a Venmo-like digital wallet and peer-to-peer payments service. Linda Yaccarino, X’s chief executive, promised that with Visa in the fold, X Money would debut its services before the end of the year.

Under ordinary circumstances, a microblogging website owned by a White House employee announcing imminent plans to enter the financial services business could expect to undergo rigorous scrutiny from the Bureau. As CNET notes, details about “how secure your banking data is” on X Money are “still unclear,” which is the sort of thing about which users will want to know more before opening virtual checking accounts on a platform ridden with porn bots, crypto scams, and crypto scams run by likely porn bots. Just a few months ago, the CFPB under Chopra’s leadership ordered Amazon, Apple, Facebook, Google, and other X competitors to turn over information about how they operate their digital payment systems, citing its ongoing obligation to “monitor for risks to consumers.” Presumably, none of these companies will have to comply with these orders on Bessent’s watch, and X will not be receiving one anytime soon. 

In Musk’s ideal world, he would be able to turn X into an app that can access your life savings without having to contend with the CFPB at all. But a CFPB run by a Trump lackey under strict orders not to do any meaningful work is a pretty appealing alternative. 

Complaining about the CFPB’s purported “inefficiency” is a lazy repackaging of the Republican Party’s standard objections to any agency that is good at its job: Safeguarding the financial interests of everyday people is indeed an inefficient method of making the Republican Party’s corporate donors wealthier. But years of sustained political attacks from the right have already weakened the CFPB. The movement fueling the Trump-Musk presidency might be able to quietly finish it off.

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