Companies Mentioned
Why It Matters
Weakening the CFPB could expose consumers to predatory financial practices and fragment enforcement across multiple regulators. It also marks a significant shift in U.S. financial regulatory policy.
Key Takeaways
- •Acting director orders staff halt work by 2025.
- •CFPB dropped 22 enforcement actions, risking $3B refunds.
- •Funding freeze threatens agency’s operational capacity.
- •Court challenges aim to protect remaining CFPB staff.
- •Congress likely to retain consumer protection duties elsewhere.
Pulse Analysis
The CFPB’s current crisis stems from a series of politically driven actions that have crippled its operational core. In early 2025, acting director Russell Vought issued an order requiring employees and contractors to cease all work, while simultaneously blocking any new appropriations. Coupled with the Department of Government Efficiency’s proposal to dismiss up to 90 percent of the bureau’s workforce, the agency’s capacity to monitor financial markets has been dramatically reduced. Ongoing court battles aim to block these terminations, but the legal uncertainty further hampers day‑to‑day enforcement.
Beyond staffing woes, the bureau has voluntarily dropped more than 22 enforcement actions and altered 20 settled cases, eliminating potential refunds exceeding $3 billion for harmed consumers. High‑profile suits against Capital One’s 360 Savings program and the Zelle payment network were among those abandoned, signaling a retreat from aggressive oversight of banks and fintech platforms. This backpedaling may embolden lenders to maintain opaque fee structures and weaken consumer confidence in digital payment ecosystems. For fintech investors, the regulatory pullback introduces heightened risk, as the protective shield that once curbed abusive practices erodes.
Looking ahead, the CFPB’s fate will likely be decided in Congress rather than the executive branch. While the current administration seeks to defang the agency, lawmakers retain the authority to dissolve it or reassign its functions to existing regulators such as the Fed, FDIC, OCC, FTC, and NCUA. Should the bureau be dismantled, oversight would become fragmented, potentially slowing response times to emerging abuses in credit reporting, auto financing, and emerging payment technologies. Stakeholders—ranging from consumer advocacy groups to financial institutions—must monitor legislative developments, as the ultimate structure of U.S. consumer financial protection hangs in the balance.
Has the CFPB Reached the End of the Road?
The Consumer Financial Protection Bureau is on “life support,” according to a press release issued early Monday by Consumer Reports. Key reasons for that dire prognosis include a 2025 order from the CFPB’s acting director, Russell Vought for employees and contractors to stop all work, Vought’s direction to halt new funding for the agency, and efforts by the Trump Administration’s Department of Government Efficiency to fire as much as 90% of the CFPB’s staff. Efforts to fire staff are being challenged in court.
Other factors leading to Consumer Reports’ conclusion are the CFPB’s decision to drop more than 22 enforcement actions against banks and other financial companies the agency accuses of engaging in unfair and abusive practices, as well as the agency’s decision to reverse or modify orders in 20 other settled cases that would have provided refunds and restitution from banks and financial companies to consumers.
Among the cases dropped are a lawsuit against Capital One Financial Corp. alleging the bank failed to disclose alternative higher-rate accounts in its 360 Savings account program, which the CFPB claims collectively cost 360 Savings accountholders $2 billion in interest; and a suit against the Zelle network alleging it failed to protect consumers from fraud on its platform.
The agency’s decision to abandon its $95-million settlement with Navy Federal Credit Union over deceptive overdraft fees was also cited as a contributing factor. In total, the three cases “had the potential to return more than $3 billion in refunds and restitution to consumers,” according to Consumer Reports.
Founded in 1936, Consumer Reports is an independent, nonprofit organization that publishes reviews, ratings, and investigations of consumer products and services.
Decreased oversight of Big Tech and fintechs is another factor cited by Consumer Reports for the CFPB’s demise. Consumer Reports also noted that in the past year the CFPB has backed away from “longstanding efforts to lower excessive late fees for credit cards” and that a similar rule to lower overdraft fees was overturned by Congress. If enacted, the two mandates allegedly would have saved consumers $10 billion and $5 billion respectively.
“The consequences for consumers are very serious, because consumer financial protection functions were centralized in CFPB after the devastating financial crisis in 2008-2010, where there were 8 million foreclosures and millions of jobs lost due to the economic meltdown,” says Chuck Bell, advocacy program director at Consumer Reports, in an email message. “Without a strong CFPB to supervise and oversee banks and non-bank financial companies, the U.S. will have only a patchwork system to ensure fair competition and consumer financial protection.”
Indeed, without a functioning CFPB, he alleges, “Predatory financial practices will likely flourish because there will virtual regulatory deserts in major sectors such as credit reporting, auto lending and digital payment apps. Consumers who are harmed by unfair and deceptive practices will have a much harder time getting help from anywhere, because the federal government has neutered the nation’s leading consumer financial watchdog.”
The CFPB could not be reached for comment.
Some payments-industry experts do not see the changes occurring at the CFPB, which was created in 2010 in response to the 2008 financial crisis to protect consumers from unfair and abusive financial practices, as a negative.
“For context, it’s important to bear in mind how utterly politicized the CFPB, insulated from Congressional oversight, was under former director Rohit Chopra. The current administration has tried aggressively to defang it,” says Eric Grover, principal at Intrepid Ventures.
Nevertheless, Grover points out that Congress, not the Trump administration, has the power to dissolve the agency, and it is unlikely Congress will take such a step.
“If the CFPB were eliminated, Congress would transfer its consumer-protection activities back to the Fed, the FDIC, the OCC, the NCUA, the FTC, HUD, and the Department of Education, all of which retain the institutional capacity, and in many cases the staff, to do the job,” Grover adds.
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