The end of the CFPB

Feb 10, 2025

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QUICK FIX

The Trump administration shut down the Consumer Financial Protection Bureau this weekend. It may come back to haunt them.

On Friday, Elon Musk identified the government watchdog as the Department of Government Efficiency’s next target. Russ Vought – the Office of Management and Budget chief who replaced Treasury Secretary Scott Bessent as the CFPB’s acting director — on Saturday night issued a stop-work order to the agency’s supervisory and enforcement teams and announced his plan to shut off funding.

Its X account was deleted and its home page was unplugged. Vought on Sunday told staff that the agency’s offices would be closed this week.

Republicans and industry leaders have bemoaned the CFPB’s existence for years, claiming that the agency — the brainchild of then-Harvard University Professor Elizabeth Warren — was functionally a Democratic battering ram used to needlessly punish Wall Street banks, nonbank lenders and fintech companies. Though its work was occasionally praised by GOP populists — there were even rumors that former Director Rohit Chopra was angling to keep his job by cozying up to Vice President JD Vance — the administration’s kneecapping of the agency echoes what occurred during Trump 1.0, when former OMB Director Mick Mulvaney took a similar tack.

The difference now is that Trump and Musk are hellbent on actually putting the kibosh on major federal agencies, rather than simply weakening them to a point of temporary irrelevance. As tech and crypto industry leaders like Coinbase CEO Brian Armstrong cheered when Musk and Vought stripped the CFPB to its studs, others warned that the rush to eliminate an agency that oversees everything from the mortgage market to fintechs could come at a cost.

“When you tear it all down, you potentially lose what had been good regulatory policy,” said Phil Goldfeder, the chief executive of the American Fintech Council. “When operated correctly and bereft of ideological drive, the CFPB could be a valuable tool for responsible regulation.”

CFPB employees who went to the building Sunday afternoon to retrieve things they would need to work remotely were turned away by security, according to an employee who said roughly a dozen people were waiting in the lobby when they were told they could not enter.

A printout of instructions to the security guards tells the officers to say the “1700 G Street facility is closed and staff are not permitted access this week…Per the COO primary staff that are not telework-ready will receive administrative leave for tomorrow,” according to a picture of the instructions reviewed by POLITICO. “Other staff that believe they cannot work should reach out to their supervisor for guidance. We will be working on a process for staff that need to pick up their CFPB laptop and hopefully communicate that by Tuesday.”

The Trump administration’s abrupt shuttering will likely compel state policymakers — particularly in blue states with powerful regulatory regimes of their own — to chart their own course on consumer protection. Chopra published a blueprint for strengthening state-level rules shortly before Trump took office last month. With the CFPB once again at the center of a political firestorm, “the response at the state level could serve to be more damaging than what’s happening at the federal government,” Goldfeder said.

What’s more, “deleting” the CFPB — to use Musk’s verbiage— could also leave the new administration exposed to political risks if the economy softens, markets contract and bad actors in financial services are exposed. The CFPB was created through Dodd-Frank reforms in response to regulatory failures that allowed the subprime mortgage crisis to fester and left consumers in the lurch. As more Americans turn to nonbanks and fintechs for financial services, the obliteration of a dedicated regulator could scramble the administration’s ability to respond to future financial disasters.

“It’s been 17 years since the crash,” said Dennis Kelleher, the president, CEO, and co-founder of Better Markets. “It’s just mind-boggling that the financial industry has the power to cripple a consumer protection agency that was created to prevent ripping off financial consumers and undermine financial stability.”

It’s MONDAY — Congratulations to the great people of Philadelphia and South Jersey. You gave us pork roll and, for that, we have heartburn. For econ policy thoughts, Wall Street tips, personnel moves or general thoughts, email Sam at ssutton@politico.com.

Driving the Week

MONDAY … The 2025 Washington International Trade Conference kicks off at 1 p.m. …

TUESDAY … Fed Chair Jerome Powell testifies at Senate Banking at 10 a.m. … The House Ways and Means Oversight Subcommittee holds a hearing on “IRS Return on Investment and the Need for Modernization” at 10 a.m. … House Agriculture holds a hearing “Examining the Economic Crisis in Farm Country” at 10 a.m. … The House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “A Golden Age of Digital Assets: Charting a Path Forward” at 2:30 p.m. … SEC Commissioner Hester Peirce, CFTC Commissioner Summer Mersinger, Sen. Cynthia Lummis, (R-Wyo.) and Rep. Dusty Johnson (R-S.D.) will speak at a Federalist Society event on digital assets at 3 p.m. … Fed Gov. Michelle Bowman speaks at the 2025 Iowa Bankers Association Bank Management and Policy Conference at 3:30 p.m.

WEDNESDAY … The Labor Department will release the Consumer Price Index for January at 8:30 a.m. … The Peterson Institute for International Economics hosts a virtual event on transatlantic trade at 9 a.m. … Former Council of Economic Advisers Chair Jason Furman and former Assistant Treasury Secretary for Financial Markets Matthew Rutherford speak at a Brookings Institution event on the federal debt at 10 a.m. … The House Small Business Committee holds a hearing on SBA lending programs and community banks at 10 a.m. … Powell testifies at House Financial Services at 10 a.m. … House Small Business Chair Roger Williams (R-Texas) and Rep. Monica De La Cruz (R-Texas) will participate in a virtual discussion on proposed reporting requirements affecting small businesses at 2 p.m. … Fed Gov. Christopher Waller will give a speech about stablecoin infrastructure at 5:05 p.m. …

THURSDAY … The Producer Price Index for January will be released at 8:30 a.m. … Senate Agriculture holds a hearing on the agricultural economy at 9:30 a.m. … The Urban Institute holds a virtual discussion at 11 a.m. on recapitalizing government-sponsored enterprises …

FRIDAY … The Import Price Index for January will be released at 8:30 a.m.

Speaking of the Super Bowl — Declan Harty reports that gaming lobbyists, the NFL and a top regulator are sounding alarms as prediction marketplaces like Crypto.com and Kalshi move into sports betting.

Prices, prices, prices — Trump on Friday said he’ll move to impose reciprocal tariffs later this week, matching the duties imposed by other countries, Victoria Guida and Doug Palmer report.

— And while Trump’s still viewed favorably by voters, a new poll from CBS News found that majorities “feel the new administration isn't focusing enough on lowering prices of goods and services.”

— Trump’s push to unilaterally impose new levies on imports “represents another major effort to expand presidential authority,” writes Ankush Khardori.

Meanwhile, at Treasury — Musk’s DOGE blitz at Treasury continued on Friday when Bessent tapped Tom Krause, the CEO of Cloud Software Group who has been leading the review of federal payments, to perform the duties of Treasury’s fiscal assistant secretary, Michael Stratford reports. DOGE’s work at Treasury led to another lawsuit brought by blue state attorneys general who say the group’s access to sensitive payment systems has put federal funds at risk, write Josh Gerstein and Emily Ngo.

— On Saturday, Manhattan-based U.S. District Judge Paul Engelmayer issued the middle-of-the-night order that blocks most Trump administration officials — including Elon Musk and his allies — from accessing sensitive Treasury records, Kyle Cheney reports.

— The order was immediately condemned by Musk, who claimed — without evidence — that Engelmayer is corrupt and should be impeached. Despite the court order, Musk on Saturday said Treasury and DOGE had reached an agreement changing reporting requirements for “all outgoing government payments,” Ali Bianco reports.

— And if you’d like to get a sense of what could happen next, here’s what Vance posted to X on Sunday: “If a judge tried to tell a general how to conduct a military operation, that would be illegal. If a judge tried to command the attorney general in how to use her discretion as a prosecutor, that's also illegal. Judges aren't allowed to control the executive's legitimate power.”

— One last thing. Musk said Marko Elez will be rehired, per The BBC’s Holly Hendrich. The DOGE official resigned from his post at Treasury after racist social media content was unearthed by The Wall Street Journal.

Trump on Treasury — There was some confusion on Sunday evening after Trump suggested that Musk had identified some problems when going through data at the Treasury Department: “There could be a problem, you’ve been reading about that, with Treasuries,” he told reporters, adding that the debt might be less “than we thought of.”

An administration official clarified to Victoria that the president was not talking about U.S. Treasury securities but rather about payments made through the department.

Will it play in Peoria? — Trump's post on Truth Social, roughly around the end of the third quarter of the Super Bowl: “For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let's rip the waste out of our great nations budget, even if it's a penny at a time.”

First in POLITICO: New fellows — Former Commodity Futures Trading Commission Chair Rostin Behnam, former National Economic Council Director and Federal Reserve Vice Chair Lael Brainard and former House Financial Services Chair Patrick McHenry (R-N.C.) will join the The Psaros Center for Financial Markets and Policy at Georgetown University’s McDonough School of Business as distinguished fellows.

— What they’re saying: “While in Congress, I sought to drive a bipartisan policy agenda that looked beyond day-to-day political battles to actually address the challenges facing America's financial system. The Georgetown Psaros Center shares those goals,” McHenry said.

— “I am excited to contribute to the Psaros Center’s mission of using unbiased and data-driven research to help bridge gaps between policymakers and financial market participants,” said Behnam. “Strengthening policy through engagement, and solution-oriented dialogue not only benefits financial markets, but our country as well.

— “Financial markets are like the circulatory system for the economy: When they are working well, it leads to financial security, good jobs, business dynamism, and innovation. I look forward to continuing to work on financial resilience issues at the Psaros Center,” said Brainard.

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At the Agencies

Movement at the OCC — Bessent on Friday announced that he would appoint Rodney Hood, the former top regulator for credit unions, as the acting comptroller of the currency, Stratford reports.

DEI is DOA at HUD — Housing and Urban Development Secretary Scott Turner on Friday directed staff to stop enforcing a 2016 rule requiring HUD-funded facilities to grant equal access based on gender identity, Katy O’Donnell reports.

DOL under pressure — A federal judge rejected federal employee union efforts to block Musk’s DOGE team from accessing Labor Department data — including the medical and financial records of millions of Americans, Nick Niedzwiadek reports.

Jobs report

Larry Seyfried, a former aide to House Financial Services Chair French Hill (R-Ark.) and McHenry, has joined the Electronic Payments Coalition as its head of federal government relations.

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