It looks like the end of the road for a government watchdog, which experts say could leave you with fewer financial protections.
The Consumer Financial Protection Bureau is beginning to “wind down” operations as its new leadership team and Elon Musk’s DOGE gut the agency, according to a lawsuit filed by the union representing CFPB employees.
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“Staff were told by senior executives that the CFPB would be eliminated except for the five statutorily mandated positions,” a current CFPB employee testified under the pseudonym Drew Doe. “The CFPB would exist in name only.”
The government agency, which oversees consumer financial services and products, employs 1,400 workers but has already suspended most operations.
In the past two weeks, the agency dropped multiple lawsuits, including cases alleging Capital One misled its customers and operators of Zelle skipped important safety features. Last week, the US Senate voted to strip the agency of its power to monitor digital payment platforms, including Musk’s recently announced X payment platform.
What does all this mean for you?
“We will see a CFPB that is less vigilant in enforcing consumer protection laws,” Chris Roberts, a class action lawyer at Butsch Roberts & Associates, said in a written response. “This means consumers must be more educated about their rights and must be much more vigilant about enforcing their rights.”
The CFPB emerged in the wake of the 2008 financial crisis with the mission of “enforcing federal consumer financial laws and protecting consumers.” As of December 2024, the CFPB reported it had recovered up to $21 billion in compensation, debt cancellation and other forms of relief for American consumers.
With funding strangled and the staff not allowed to work, the CFPB is essentially dismantled. Here’s what that could mean.
Why does the CFPB exist?
The CFPB launched in 2011 as an independent financial regulatory enforcement and watchdog agency. Authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, Congress established the independent bureau to address financial regulatory failures that were blamed for leading to the subprime mortgage crisis and subsequent 2008 Great Recession.
In addition to overseeing adherence to financial regulations, the CFPB investigates consumer complaints into unfair or deceptive financial products or services and offers public-facing financial education and resources.
Over the course of its 14-year history as an independent agency, the CFPB had often drawn the ire of Republican politicians and the financial industry who challenged the enforcement power of the bureau in court. In June 2020, the Supreme Court ruled that the president could remove the CFPB director without cause but that the agency and its funding were protected by laws that could only be rescinded by the legislative branch. A 2024 Supreme Court ruling upheld the constitutionality of the bureau’s funding structure.
What happens if the CFPB is eliminated?
Even if the CFPB can’t be legally eliminated, hampering the bureau’s work could still impact consumers who rely on the agency to protect them from fraud, financial abuse and predatory lenders.
“With the new administration halting work at the CFPB, American citizens are at greater risk of financial fraud and discrimination,” said Leslie H. Tayne, finance and debt expert and founder of Tayne Law Group. “In the long term, reduced oversight at the CFPB may erode trust in financial institutions and threaten economic stability for American consumers.”
Relaxing regulations on banking industries could become risky as the field grows more crowded and competition more fierce. Buy now, pay later apps have grown in popularity, as have peer-to-peer payment services.
What options do you have if the CFPB is gone?
Experts say there are still options for filing a complaint but you might have to do a bit more research on your own to find help.
“Consumers can take refuge in consumer class-action attorneys, many of whom are already going after the financial institutions the CFPB let off the hook,” consumer advocacy lawyer Danny Karon, of Cleveland-based law firm Karon, said in a written response. “They may also contact the consumer-protection divisions of their state attorneys’ general.”
Each state and the District of Columbia has its own attorney general, which typically fields consumer complaints through an online form or hotline. You can find your state’s attorney general on the National Association of Attorneys General website.
You can also file reports of fraud and identity theft with the Federal Trade Commission.
And for now, the CFPB website and its complaint process is still operational, although the video on its homepage explaining how the complaint process works is currently unavailable.
Is Trump targeting the FDIC next?
There has been speculation that as part of its agenda to remove regulations, DOGE could undermine or dismantle the Federal Deposit Insurance Corporation too. Hundreds of FDIC workers have already been fired, according to a Bloomberg report.
Created in the aftermath of the Great Depression to reassure Americans that banks were safe, the FDIC uses an industry-funded pool of money to cover losses in case of bank failures. Each depositor to a bank or credit union supported by the FDIC has their money insured up to $250,000 and this promise is backed by the US government.
“Unlike the CFPB, the FDIC has its own statutory power,” said Bill Issac, former FDIC chairman. “It has a board of directors and its own funding from the banking industry. It would not be easy at all to dismantle the FDIC. And it would be a horrible move.”
Financial experts have warned that eliminating the FDIC could cause widespread disruption to the banking industry, potentially affecting not only consumer trust in financial institutions but also the value of the US dollar.
“If the FDIC is dismantled, all money in our banks would be at risk,” said Jason Steele, a credit card and personal finance expert.
However, experts point out that for now, the FDIC remains in place, so bank deposits remain insured up to $250,000. If you bank with a federally insured credit union, your deposits are covered by the National Credit Union Administration.
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