How dismantling the Consumer Financial Protection Bureau turns back the clock — exposing consumers to financial harm and encouraging unfair industry practices
People have been flooding the internet with stories of how the Consumer Financial Protection Bureau (CFPB) helped protect them from financial scams and exploitation ever since Elon Musk and CFPB Acting Director Russ Vought have made clear their intention to close down the CFPB. By protecting Americans from financial exploitation, the CFPB has been performing an ancient, social function of protecting people from financial scams and exploitation. There will continue to be a need for this function whether the CFPB survives current attacks or not.
I am one of many Americans the CFPB has helped protect. For five years, I was harassed by a debt collection agency for a debt I never owed. I told the debt collector there was a misunderstanding — that they bought a debt that never existed — but they still pursued me for it.
My ordeal began in 2019 when I visited a store to take out a cell phone contract. The network’s SIM card didn’t work in my handset, so the store canceled the contract. End of story – or so I thought.
Eight months later, a debt collector started calling. I explained to them that the store sold them a phantom debt by mistake, but they weren’t interested in the truth. The threatening calls and letters kept coming, following me for five years even as I moved apartments and after the legal time limit to bring enforcement proceedings expired. Then the debt collector slashed my credit score by 40 points.
When I complained to the CFPB through its online portal, the debt collector immediately agreed to stop hounding me and restored my credit score. All it took to get them to play fair was a little accountability from a government watchdog.
My story isn’t unique. Social media is filled with similar accounts of the CFPB protecting people from phantom debts and financial wrongdoing, large and small. Debt collectors bet on people giving up and paying, even when they don’t owe anything.
People have always needed rules and organizations to protect them from abusive financial practices. Ancient religions (including Christianity, Judaism and Islam) all had rules to regulate moneylenders, interest, risk sharing, and debt collection, as did other societies. Modern religious organizations have even interpreted the CFPB as a modern extension of their old teachings.
The CFPB performs this ancient social function, but in a way that fits the complexity of modern finance. Today’s moneylenders are large, sophisticated organizations with a lot of power over people’s lives. They have necessary tools like the ability to unilaterally hit people’s credit scores, and to follow people to new addresses and phone numbers as they move. They also have the ability and incentive to impose excessive and hidden fees on customers and subtly overcharge people in ways that may be legal but are also unfair. These are the modern equivalent of ancient moneylenders charging excessive interest or exploiting people who are in need.
Dismantling the CFPB means going back to a world of higher overdraft fees (which the CFPB capped at $5), higher credit card late fees (which the CFPB reduced from $32 to $8), higher junk fees from debt collectors, and a host of other exploitative financial practices that are the modern equivalent of ruinous usury and abusive enforcement from ancient moneylenders. It also means Americans lose their neutral financial referee.
Yet the reality of the CFPB’s day-to-day work—protecting Americans from financial exploitation—gets lost in attempts to control the narrative. The CFPB’s detractors claim that it oversteps its authority, breaks the law, is unaccountable, launders money for democrats, and persecutes ‘honest’ crypto entrepreneurs and conservatives. These extreme claims try to muster support for dismantling the CFPB and disguise a policy that obviously hurts most Americans.
Destroying an agency that protects consumers from financial wrongdoing benefits prominent members and backers of the current administration. Elon Musk is launching a consumer financial products business through the X app, and Trump and his family have been hawking their own cryptocurrency meme coins. Trump’s acolytes in Congress have already introduced a bill allowing banks to charge more and higher fees, something the CFPB restricted to protect people. Debt collectors, payday lenders, large banks, and crypto entrepreneurs have big incentives to undermine the agency that regulates them.
More generally, government regulators have a role in making markets function well and in the public interest. We need government to make rules around things like weights and measures, product safety, deceptive advertising, and guaranteeing fair competition, to ensure that companies work for their customers instead of scamming or exploiting them.
Modern society has moved far beyond using local magistrates’ courts and ecclesiastical customs to protect people from financial exploitation. Specialist market regulators like the CFPB protect people from abuses of these powers in the modern world, and make the financial services industry operate more fairly. In seeking to politicize and dismantle the CFPB, the Trump administration is siding with financial scammers over most Americans. If it succeeds, the main result will be to make banks and debt collectors more profitable, scammers more prevalent, and most of us more vulnerable to exploitation.
