Trump Administration Orders Shutdown of Consumer Financial Protection Bureau

Trump Administration Halts Operations of Consumer Financial Protection Bureau

Reports confirm that the Consumer Financial Protection Bureau (CFPB), established for preventing 2008 financial crisis-like situations, has been asked by the Trump administration to cease nearly all its work.

New Director of Office of Management and Budget Stops CFPB Activities

Russell Vought, the new director of the Office of Management and Budget, issued orders to the CFPB to stop work on any rules in progress, hold off on the enforcement of finalized rules, and cease any ongoing investigations. This move signifies the consistent targeting of the agency by conservatives since its inception in the 2010 financial reform legislation post the 2007-2008 financial crisis.

A Glimpse at CFPB’s Role

As a creation of Congress, any formal elimination of CFPB would require a separate act by Congress. However, the director has the discretion to decide on enforcement actions. The closure of the agency prompted a response from Elon Musk who commented, “CFPB RIP”.

CFPB’s Funding Status

Vought, late on Saturday, also stated that the CFPB would not withdraw its forthcoming round of funding from the Federal Reserve. He claimed the existing reserves of $711.6 million were “excessive”. Congress had previously directed the bureau’s funding by the Fed to shield it from political pressures.

Impact of CFPB Shutdown on Consumers

The agency, since its establishment, has secured nearly $20 billion in financial relief for U.S. consumers in the form of canceled debts, compensation, and reduced loans. The shutdown of the CFPB has brought into sharp focus the tension between Trump’s promises of reducing costs for working-class families and his pledge to cut down government regulation.

Trump’s Plans for Credit Card Interest Rates

During his campaign, Trump had proposed to cap credit card interest rates at 10%, following a surge to record levels above 20% on average due to the Federal Reserve lifting interest rates in 2022 and 2023. The CFPB had started work on implementing this proposal.

Future of Consumer Complaints and Investigations

Despite the shutdown, the bureau can still accept complaints. However, it can no longer conduct exams or pursue existing investigations. The CFPB is also believed to be prevented from interacting with the companies it regulates, consumer advocates, or other external groups.

Origins and Controversies Surrounding CFPB

The establishment of the bureau in the aftermath of the 2007-2008 financial crisis was spearheaded by Obama. The creation of the CFPB was largely attributed to Massachusetts Democratic Sen. Elizabeth Warren and has since drawn lawsuits from major banks and financial industry trade associations.

AP Writers Josh Boak and Chris Megerian contributed to this report. AP Writer Holly Ramer contributed from Concord, New Hampshire.