What Will Result from Not Having a CFPB

The Dodd–Frank Wall Street Reform and Consumer Protection Act passage in 2010 was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession. The CFPB in creation was an independent bureau within the Federal Reserve. Its creation was meant to write and enforces rules for financial institutions, examine both bank and non-bank financial institutions, monitors and reports on markets, and collect and tracks consumer complaints.

On February 10, 2025 Office of Management and Budget Director Russell Vought ordered all CFPB staff to cease all work between February 10 and 14, and closed the CFPB Washington headquarters. This post describes what the CFPB did and was created as a result of the Great Recession of 2008.

Dismantling the CFPB Signals a Return to Pre-2008 Levels of Corporate Fraud – Roosevelt Institute

Donald Trump and Elon Musk’s forced dismantling of the Consumer Financial Protection Bureau (CFPB) marks a dangerous turning point in the fight for corporate accountability and consumer interests, threatening the protections from which millions of Americans have materially benefited. As Trump and Musk surely intended, the CFPB’s destruction at the hands of the Department of Government Efficiency (DOGE) will make it easier for Wall Street and monopolistic corporations to scam, defraud, and steal from the American public, especially from the most economically vulnerable. But perhaps the more insidious implication of the orchestrated collapse of the CFPB, in particular (and DOGE’s mass firings and induced departures at virtually all other federal agencies, in general) is what it’ll do to the public’s faith that their government works for them.

Since its founding, the CFPB has provided a much-needed check on corporate power in the financial services sector. Its existence discourages fraudulent corporate behavior. It also seeks financial redress for consumers when fraud has been perpetrated and provides public-interest career pathways for financial analysts. That it should have this impact was intentional: It was created with the express purpose (as its name suggests) to prioritize the best interests of consumers. The result of gutting it will be less public-interest oversight of financial firms and products, fewer opportunities for recourse for harmed consumers, diminished trust in government, and a return to the pre-2008 economic dynamics that made the bureau such an urgent addition to the federal government in the first place.

Doomed to Repeat: CFPB Emerged After the Great Recession to Protect Consumers

The CFPB was born out of the Great Recession of the late aughts, a deep and sustained financial crisis fueled by deceptively complex and deceivingly shady behaviors of a handful of financial firms. In the decades leading up to the crisis, the financial sector grew rapidly but became no more efficient. Its growth coincided with legislative moves to deregulate the financial sector enabling financial firms to take on higher-risk, higher-reward activities without sufficient government oversight or intervention. Through schemes like subprime mortgage lending and the complicated combination of creating mortgage-backed securities, credit default swaps, and collateralized debt obligations that followed; financial firms were able to profit from relatively new financial products earning them higher profits but destabilized our financial system. When that house of cards collapsed in 2008, roughly 9 million people lost their jobs, and 6 million families lost their homes.

The most comprehensive federal response to the preventable crisis was 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Dodd-Frank reorganized the financial regulatory system, creating new entities like the CFPB to protect consumers against abusive financial products and practices. Prior to Dodd-Frank, consumer interest was a secondary concern for several federal regulators. A dozen or more different agencies from the banking regulators to the Department of Justice to housing and trade agencies; all had some responsibility for ensuring consumer protection. The diffused spread of the responsibility meant no one agency had sufficient institutional infrastructure or expertise on these matters to prioritize it in practice. With no one agency to turn to, consumers who felt tricked or defrauded by complicated financial products had to turn to a complex set of regulatory institutions to seek remedy. The CFPB was created with the sole motivation of protecting and advancing the consumer interests. (It was also created to be independently funded to insulate it from the political attacks that it’s currently facing from this administration).

Getting rid of the CFPB (as Trump and Musk desire) follows from the same faulty logic that led to the Great Recession. The CFPB became so necessary because, for years, regulators pulled back and financial firms flocked in until they triggered a devastating recession acutely felt by millions of families and communities. The CFPB was created to prevent the private-sector abuses of the last financial crisis—dismantling it will only recreate dysfunctional pre-2008 dynamics.

The Far-Reaching Consequences of Gutting the CFPB

Perhaps the most materially consequential impact the CFPB has had flows from its ability to take enforcement actions against financial firms for “unfair, deceptive, or abusive acts and practices.” But these are far from the only ways the bureau has benefited consumers.

First, the CFPB has delivered real monetary relief to consumers through legal redress when corporate abuses have occurred. As of January 2025, CFPB enforcement actions have resulted in $19.7 billion in consumer relief and $5 billion in civil penalties for 195 million people, including direct monetary compensation, principal reductions, and canceled debts. Some of the most noteworthy CFPB actions include winning back (and the following barely scratch the surface):

• $190 million from Bank of America for double-dipping on non-sufficient fund fees, opening unauthorized consumer financial accounts, and making misleading statements regarding certain credit card rewards;

• $3.7 billion from Wells Fargo for widespread mismanagement of customer accounts including by misapplying loan payments, wrongfully foreclosing on homes, and illegally repossessing vehicles;

• $89 million from Apple and Goldman Sachs after the companies misled iPhone purchasers about interest-free payment options and after Apple failed to send customer disputes to Apple’s card issuer, Goldman Sachs; and

• $15 million from Equifax after the company ignored customer disputes about improper credit reports.

Second, the CFPB operates a portal for consumers to submit instances of suspected or potential financial fraud. Through this database, the CFPB fields approximately 25,000 consumer complaints per week—serving as the eyes and ears of consumer finance regulation. Beyond collecting initial evidence of corporate abuse for a potential investigation, the portal also connects people with their government, making them feel heard, protected, and prioritized. And, much like calling 911 sets in motion an organized dispatch of various emergency entities to aid victims, the CFPB coordinates with other federal agencies to investigate and regulate firms and products that cause consumers harm.

Third, the CFPB acts as a crucial deterrent in the market for financial services and products. It sometimes curbs corporate excess before it even starts. Even before it leads to legal or administrative action, the CFPB discourages bad behavior because firms know it would go after them if they step out of line. In introducing the idea of the bureau, Elizabeth Warren described its indirect presence as having a powerful impact as a dedicated consumer watchdog private-sector behaviors:

[With a consumer-centered agency,] industry practices would change as well. Corporate profit models based on marketing mortgages with a one-in-five chance of costing a family its home would stop. Credit card models that lure 18-year-olds with no income and no credit history into debt with promises of “no parental approval”—on the assumption that their parents will pay it off, rather than see their children begin their adult lives with ruined credit histories—would stop. Rollovers that can turn a simple loan into a mountain of debt would stop.

As just one example of this in action over the last few years, banks began voluntarily opting out of predatory fee models after the CFPB began a push to eliminate consumer “junk fees,” a push that eventually resulted in a $5 cap on extractive overdraft fees. (Trump and congressional Republicans now want to overturn that rule and allow banks to raise their fees on customers. Without the CFPB, that will be a lot easier to do.)

Finally though and no less important, the CFPB creates higher-productivity career opportunities for people with skill sets that are highly valuable in the private sector (financial analysts, financial auditors, and corporate legal experts). By letting them move to the public sector, their skills produce benefits to the economy and to consumers. The work of sussing out potential “unfair, deceptive, or abusive” behaviors at companies that offer complicated financial products (from payday loans to P2P payment apps to crypto and more) requires expertise that oftentimes overlaps with the financial firms doing the misbehaving. By providing and fostering public-interest career opportunities, the CFPB calibrates the market for talent toward public service and away from nonproductive, extractive, private-sector employment.

“Dismantling the CFPB Signals a Return to Pre-2008 Levels of Corporate Fraud,” Roosevelt Institute