Consumer Protection Bureau Effectively Shut Down Under New White House Directive
The Trump administration has ordered the Consumer Financial Protection Bureau (CFPB) to suspend nearly all operations, effectively shutting down an agency created to protect consumers in the wake of the 2008 financial crisis.
Russell Vought, the newly appointed director of the Office of Management and Budget, issued a directive late Saturday instructing the CFPB to stop working on proposed rules, suspend the implementation of finalized but not yet effective regulations, and cease investigative activities. The directive, confirmed by The Associated Press, also ordered the agency to halt all supervision and examination efforts.
On Sunday, officials announced that the CFPB’s Washington, D.C., headquarters would be closed from February 10 to February 14. Employees and contractors were told to work remotely unless otherwise instructed. No explanation was provided for the building’s closure.
The move is part of a broader effort by the Trump administration to scale back federal agencies, with a similar order recently issued to the U.S. Agency for International Development (USAID).
A Political Target Since Its Inception
The CFPB has long been a target of conservative lawmakers. Established under the 2010 Dodd-Frank Act during the Obama administration, the bureau was designed to regulate banks, lenders, and financial institutions, protecting consumers from predatory practices.
Trump and his allies have repeatedly criticized the agency, arguing that it wields too much power with little accountability. While only Congress has the authority to formally eliminate the CFPB, the head of the agency can control its enforcement actions—effectively rendering it powerless.
Elon Musk weighed in on the matter over the weekend, posting “CFPB RIP” on social media platform X. Meanwhile, the CFPB’s official website was taken offline, displaying a “page not found” message as of Sunday.
Funding Cutoff and Legal Implications
In addition to halting operations, Vought announced that the CFPB would not withdraw its next round of funding from the Federal Reserve. Under current law, the bureau is funded by the Fed to insulate it from political interference, but Vought described its $711.6 million reserve as “excessive.”
“This spigot, long contributing to CFPB’s unaccountability, is now being turned off,” he posted on X.
Despite its critics, the CFPB has played a key role in financial oversight, securing nearly $20 billion in relief for consumers since its inception. Just last month, the bureau sued Capital One for allegedly misleading customers about high-interest savings accounts, costing them over $2 billion in lost interest.
Dennis Kelleher, president of the advocacy group Better Markets, condemned the decision. “That’s why Wall Street’s biggest banks and Trump’s billionaire allies hate the bureau: it’s an effective cop on the finance beat and has stood side-by-side with hundreds of millions of Americans—Republicans and Democrats—battling financial predators, scammers, and crooks,” he said.
Tensions Between Trump’s Economic Promises and Deregulation
The decision to dismantle the CFPB highlights a contradiction between Trump’s campaign promises and his deregulation efforts.
During his reelection bid, Trump pledged to cap credit card interest rates at 10%, citing the financial burden on working-class Americans. Interest rates had soared to record levels above 20% after the Federal Reserve’s rate hikes in 2022 and 2023. The CFPB had begun exploring how such a cap could be implemented.
With the agency now paralyzed, its ability to regulate banks, limit overdraft fees, and protect consumers from financial abuses is in jeopardy.
Trump-Appointed Leadership Takes Over CFPB
Vought’s email also revealed that Trump had appointed him acting director of the CFPB on Friday after firing Rohit Chopra, the bureau’s previous director.
Chopra had been a strong advocate for consumer protections, leading initiatives to cap bank overdraft fees, curb junk fees, and restrict data brokers from selling personal information. His removal signals a shift in the bureau’s priorities under the new administration.
The battle over the CFPB is expected to intensify as consumer advocates and Democratic lawmakers push back against the administration’s efforts to dismantle financial protections.
