What does having the Consumer Financial Protection Bureau on hold mean for consumers? – The Associated Press
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People attend a protest in support of the Consumer Financial Protection Bureau (CFPB), Monday, Feb. 10, 2025, at the CFPB headquarters in Washington. (AP Photo/Jacquelyn Martin)
Sen. Elizabeth Warren, D-Mass., makes the thumbs up sign while attending a protest in support of the Consumer Financial Protection Bureau (CFPB) at their headquarters, Monday, Feb. 10, 2025, at the CFPB in Washington. (AP Photo/Jacquelyn Martin)
A security officer works inside of the Consumer Financial Protection Bureau (CFPB) building headquarters Monday, Feb. 10, 2025, in Washington. (AP Photo/Jacquelyn Martin)
People attend a protest in support of the Consumer Financial Protection Bureau (CFPB) headquarters, Monday, Feb. 10, 2025, at the CFPB in Washington. (AP Photo/Jacquelyn Martin)
People hold up signs during a protest in support of the Consumer Financial Protection Bureau (CFPB), Monday, Feb. 10, 2025, at CFPB headquarters in Washington. (AP Photo/Jacquelyn Martin)
People attend a protest in support of the Consumer Financial Protection Bureau (CFPB), Monday, Feb. 10, 2025, at the CFPB headquarters in Washington. (AP Photo/Jacquelyn Martin)
NEW YORK (AP) — The Consumer Financial Protection Bureau, which Congress established to monitor credit card companies, mortgage providers, debt collectors and other segments of the consumer finance industry, is the latest U.S. government agency to have its work halted by the Trump administration.
Conservatives have long targeted the work of the CFPB. Critics complain the independent agency, funded by the Federal Reserve System, lacks sufficient supervision and regularly exceeds its regulatory authority. Defenders argue the bureau’s watchdog mission has strong bipartisan support.
Here’s some background on the scope of the CFPB’s activities and how the agency’s tenuous status might affect consumers:
The Consumer Financial Protection Bureau is charged with creating rules and taking enforcement actions to protect consumers from unfair, deceptive, or abusive practices by a wide range of financial institutions and businesses. Its actions involve banks, mortgage servicers, credit card companies, student loan processors, payday lenders, money transfer providers, credit reporting agencies and debt collectors.
During the Biden administration, the CFPB passed rules capping bank overdraft fees and removing medical debt from credit reports. The bureau sued financial services companies for misleading consumers and employers for misleading workers. It also focused on curbing junk fees and predatory lending practices.
Congress established the agency as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The legislation was intended to prevent a repeat of the 2008 financial crisis and subprime mortgage-lending scandal. The CFPB says it has obtained nearly $20 billion for consumers since then in the form of monetary compensation, canceled debts, reduced loans and other financial relief.
Russell Vought, the newly installed director of the Office of Management and Budget, told the CFPB last weekend to stop its investigations and work on proposed rules. He instructed the agency to suspend the enforcement dates of any rules that had been finalized but not yet put into effect, and closed the CFPB’s offices for a week.
Vought sent an email to employees on Monday morning saying they should “not perform any work tasks.” They were directed to contact the top lawyer for the Office of Management and Budget “to get approval in writing” before doing anything.
Vought also said in a social media post that the agency would not withdraw its next round of funding from the Federal Reserve, which Congress assigned as the CFPB’s funding source to avoid the political wrangling of the congressional appropriations process.
Two top officials resigned Tuesday in protest. Also Tuesday, Trump named Jonathan McKernan, a former Federal Deposit Insurance Corporation board member, as the agency’s new director.
Before Trump took office, banks and industry groups sometimes sued to block some of the agency’s rules.
For example, when the CFPB issued a rule in 2017 to limit the number of payments the providers of payday loans, vehicle title loans, and high-cost installment loans could take from customer bank accounts, trade associations for payday lenders challenged the bureau’s Federal Reserve funding as unconstitutional. In May 2024, the U.S. Supreme Court rejected their argument and upheld the CFPB’s funding and oversight model.
Trump on Monday defended his administration’s efforts to reform the Consumer Financial Protection Bureau, saying the agency was “set up to destroy people.”
The overdraft fee rule was finalized and set to take effect in October, but Vought’s directive puts it on hold. Banks had previously sued to get the rule thrown out.
The rule would require the largest banks to pick one of three options: to reduce overdraft fees to $5, to r
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