The fight over the CFPB is just beginning

The consumer watchdog established in the wake of the 2008 financial crisis may not be long for this world.

In just a matter of days, Elon Musk’s extra-governmental team of cost cutters, DOGE, reportedly gained access to the Consumer Financial Protection Bureau’s data, acting head of the CFPB Russell Vought moved to effectively defund the regulator and told staff to stop working, and an employees’ union sued Vought in response.

As of Monday, the CFPB’s website was active, though the image on its homepage showed up as “404: Page not found.” The CFPB’s headquarters reportedly was also closed.

Musk, who has planned a “digital wallet” feature for X, formerly Twitter, since at least last year has been critical of the agency, which would have had regulatory authority over that proposed system. Some Republicans have long called for the dissolution of the CFPB, which during President Donald Trump’s first term was slowed down significantly.

The CFPB oversees banks and various financial services companies, and it has sought to limit credit-card late payment fees and protect borrowers from predatory lending practices and scams. Damage to the agency would result in fewer consumer protections, said Adam Gana, managing partner at law firm Gana Weinstein.

“For consumers, the absence of the CFPB would likely mean a significant reduction in oversight and accountability for financial institutions, leaving individuals more vulnerable to predatory practices, such as deceptive lending, hidden fees, and other forms of misconduct,” Gana said in an email. “The CFPB has played a crucial role in protecting everyday Americans, particularly those individuals in marginalized communities, from systemic financial abuses.”

While broker-dealers and others in the financial services business could see less regulatory burden as a result of the CFPB potentially dissolving or being limited, “it could also lead to increased uncertainty and inconsistencies as oversight shifts to a patchwork of state regulators or other federal agencies,” Gana said. “This could create uneven enforcement standards and compliance challenges for firms operating across multiple jurisdictions.”

Last year, the CFPB won a lawsuit challenging its funding – a case decided by the US Supreme Court, with the justices ruling seven-to-two in the regulator’s favor. That case was brought by a national association of payday lenders and other businesses.

Fromer Trump chief of staff Mick Mulvaney, who previously was acting head of the CFPB, is among those who have called for the agency to be shuttered, criticizing it for duplicating the jurisdictions of other financial regulators.

In one of the two lawsuits filed on Sunday by the National Treasury Employees Union against Vought, the group asked the court to intervene, alleging that the executive branch’s work to dismantle the CFPB violates the separation of powers principles, as the agency was established by Congress. In the other suit, the same group claimed that access by Elon Musk and other DOGE workers violates federal laws and regulations related to privacy rights.

“Because defendant Vought is preventing [plaintiffs] and other NTEU members from doing their work for the CFPB and refusing to take the CFPB’s next draw of funding, it is substantially likely that they will lose their jobs and suffer financial harm,” the complaint in one case read.

Development of the CFPB was led by Elizabeth Warren before her time in the US Senate.

“President Trump campaigned on capping credit card interest rates at 10 percent and lowering costs for Americans. He needs a strong CFPB and a strong CFPB director to do that,” Warren said in a statement earlier this month. “But if President Trump and Republicans decide to cower to Wall Street billionaires and destroy the agency, they will have a fight on their hands.”

The agency last year reported having recovered about $21 billion for consumers since it started. It states serving as “a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace.”

“In the long run, a weakened regulatory framework could erode trust in the financial system, or equally as likely a more fraud, which ultimately harms both consumers and the industry itself,” Gana said. “While the CFPB has faced criticism, its role as a watchdog has been important in fostering both transparency and fairness in the financial marketplace.”