By Carrie Sheffield via The Daily Signal | February 15, 2025
Almost immediately after the Senate named Russ Vought Office of Management and Budget director, President Donald Trump also named him the acting director of the Consumer Financial Protection Bureau.
The Consumer Financial Protection Bureau is a rogue agency with a long history of overreach and corruption. The agency has seen rampant internal racism and anti-woman bias, according to the General Accountability Office, the investigative arm of Congress.
The Consumer Financial Protection Bureau hurts consumers by slapping unnecessary fines and regulations on lenders, making it harder for them to lend and driving vulnerable Americans into financial black markets where they are exploited. The bureau has a track record of lawlessness, and the Biden CFPB teamed up with the Justice Department to punish lenders for denying applications based on immigration status.
Under the first Trump administration, there was serious talk of dissolving the CFPB. What’s exciting is that now this seems like a very real possibility. On Friday, Trump advisor Elon Musk, Department of Government Efficiency manager, posted on X: “CFPB RIP” next to a tombstone emoji.
Shortly after his elevation, in a bold and needed move, Vought wrote on the X platform: “The CFPB has been a woke & weaponized agency against disfavored industries and individuals for a long time. This must end.”
Notifying the Federal Reserve of his plans, Vought swiftly zeroed out the Consumer Financial Protection Bureau’s funding request for the next quarter. He also stopped most operations and ordered the roughly 1,700 employees not to come to the office.
This is the right move for both taxpayers and consumers. And despite shrieking from bureaucracy supporters like Sen. Elizabeth Warren, D-Mass., who helped set up the agency as one of her pet projects, Vought’s move was legal.
The Consumer Financial Protection Bureau is funded by Federal Reserve Board profits, not appropriations from Congress. However, the Fed loses hundreds of billions of dollars on the interest it pays to banks. The Fed has not turned a profit and has instead incurred losses since September 2022. That means there are no profits to use to fund the CFPB.
The Fed can operate with negative capital because it can create money, Hal Scott, an emeritus professor at Harvard Law School and director of the Committee on Capital Markets Regulation, wrote in The Wall Street Journal back in May. “But the Fed has estimated that it won’t make back these losses until mid-2027.”
So, the bureau is existing off the Fed just printing new money, and that process of printing money out of nowhere has been one of the reasons we have had rampant inflation over the last several years. This is unacceptable. The bureau should close unless Congress appropriates money for it. Thankfully, under current congressional negotiations, such an appropriation looks unlikely.
The CFPB was created as a part of the Dodd-Frank regulatory reform passed by a Democrat-controlled Congress in 2010. When he first ran for president in 2016, Trump promised to dismantle the Dodd-Frank Act and, thankfully, this could very well mean the CFPB also. That didn’t happen during the first Trump administration, but he continues to make this pledge, and it appears on the cusp of happening.
“Dodd-Frank has made it impossible for bankers to function,” Trump has said. “It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop.”
Under Dodd-Frank regulations, community banks are disproportionately hit by additional compliance and legal costs, adding to expenses. Unfortunately, since these smaller banks do not have economies of scale, this makes it harder for them to compete with larger institutions that can better absorb and disperse costs.
Harvard researchers found that Dodd-Frank accelerated the demise of community banks, especially those owned by black Americans and serving a black clientele. Ironically, the Left tries to claim it better serves black Americans, even while it creates regulations that harm them.
Score one for the big guys. And score one against consumers, who suffer with less choice and fewer financial services options thanks to strangling regulations from places like CFPB.
What consumers really need is a financial sector that offers plentiful choice for services operating under a transparent and fairly administered regulatory framework. This does not require the CFPB, which has instead undermined such efforts.
RIP, CFPB. We knew you too well. You will not be missed.
Carrie Sheffield is the author of "Motorhome Prophecies: A Journey of Healing and Forgiveness.
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