Supervision Shut Down at CFPB Erases Consumer Protections
By Amanda Jackson
The Consumer Financial Protection Bureau is expected to let hundreds of corporations and financial institutions off the hook for violations it was investigating. That means the millions of people who were counting on the agency for protection will be left without help, especially as it braces for layoffs of 90% of CFPB staff.
Late last week, Bloomberg Law reported:
The CFPB had around 2,000 unresolved investigations or “matters requiring attention” ranging from shady and deceptive fees to unfair and targeted lending practices. In June the Trump-appointed leadership ordered those items to be removed and erased from further investigations, wiping books clean and giving corporations a pass on their harm. By the end of the week, these red flags will be abandoned given oversight being stripped.
Before the Trump administration began dismantling the agency, the CFPB established a strong track record of using supervision – the examination of bank records and other data – to benefit consumers. In short, CFPB has used this power, which Congress granted it, to obtain for consumers money stolen from them by big banks.
For example, as problems arose with bank policies on overdrafts and non-sufficient funds (NSF) fees, the CFPB in 2022 heightened its supervision to dig deeper into practices that were costing consumers hundreds of millions of dollars. Since then, financial institutions have agreed to refund nearly $250 million to their customers, about $184 million in overdraft fees and $66 million in NSF fees. With supervision gutted, those abusive practices may quietly return.
The CFPB is charged with supervising only banks with assets above $10 billion, roughly 170 institutions. But that number is misleadingly large, since many of those banks do not have meaningful consumer finance activities, such as the investment bank Goldman Sachs or Bank of New York Mellon.
In practice, the suspension of supervision benefits only the largest consumer banks in the country: JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, and others. These are precisely the institutions with the most reach into households and the greatest capacity to reimpose hidden costs if oversight disappears.
The goal of all these attacks on our vital Federal agencies like the CFPB has never been about efficiency, or in any way better serving our communities. Russell Vought, one of the architects of Project 2025 and the current acting director of the CFPB, was clear on the strategy even before Trump took office: traumatize federal workers to the point that they can’t do their jobs and don’t have the bandwidth or resources to properly regulate industry.
VIDEO: “We Want the Bureaucrats to Be Traumatically Affected”
For years, the CFPB has been a vital shield against scams and schemes that target middle- and lower-income families. Its mandate – to ensure everyone has access to financial products that are transparent and competitive – is one of the key lessons drawn from the greed and recklessness that fueled the 2008 financial collapse. That promise is now broken, and predatory financial companies will have a green light to exploit struggling consumers and silence the agencies brave enough to call out wrongdoing.
We are seeing this strategy play out. Trump and his billionaire cohorts aren’t the ones who will suffer when financial bad actors are allowed to run amok. Consumers do not benefit from deregulation or increased risk in the financial system. The gutting of the CFPB is one more part of Trump’s blatant end goal to reshape our democracy into a government rigged to further enrich the ultra-wealthy – all at the expense of families, workers, and communities.