Courts intervened, repeatedly, to block Vought from conducting mass firings without the approval of Congress. When he tried to shutter the agency by refusing to request funding for it, they blocked that, too. (The C.F.P.B. draws its budget from the Federal Reserve rather than from taxpayer appropriations—a structure designed to safeguard its independence.) “Russell Vought illegally fired me twice,” Anne Romatowski, an artificial-intelligence expert who joined the bureau in 2022, said at the protest. She had received a breast-cancer diagnosis the same week that Vought started to lay off the staff. A preliminary injunction allowed her to maintain her health-care plan while she received radiation and chemotherapy.
On the campaign trail, Trump promised to lower grocery and gas prices, and he has inveighed against what he has called the “Democrat inflation disaster.” Members of his party have demanded an end to bank bailouts, like those made after the 2008 crisis, and warned of an increasingly “financialized economy” dominated by hedge funds and private equity. To the extent that affordability and fairness are a priority, “it’s really stupid to go after the C.F.P.B.,” Alexis Goldstein, a former crypto expert there, told me. The bureau was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the landmark bipartisan legislation intended to “promote the financial stability of the United States” in the wake of the Great Recession. It enforces more than twenty laws—the Fair Debt Collection Practices Act, the Truth in Lending Act, the Electronic Fund Transfer Act, the Home Mortgage Disclosure Act, the Military Lending Act—and has broad discretion to investigate “unfair, deceptive, or abusive acts and practices.” It has recovered twenty-one billion dollars in direct relief for consumers and five billion dollars in civil penalties from a wide range of companies. Millions of Americans have come to it for help; just by filing a complaint online, they have avoided home foreclosures and had student loans forgiven.
These individual complaints guide the bureau’s systemic work. It has investigated Meta for extracting consumer data for targeted ads, capped credit-card late fees at eight dollars per month, and sued the online lender MoneyLion for overcharging members of the armed forces. It conducts prophylactic audits—called supervisory exams—of the largest banks in the country and, crucially, of other financial firms, such as mortgage servicers, auto lenders, credit-card companies, medical-debt collectors, payday lenders, debt-repair outfits, and “fintech” businesses that enable mobile banking, payments, and credit. The C.F.P.B. is the only federal entity with the power to supervise these “non-banks.”
But now, under Vought’s leadership, the C.F.P.B. has become a “zombie regulator,” Seth Frotman, its former general counsel, told me. (Vought declined my request for an interview.) The bureau has dropped at least forty lawsuits and other enforcement actions, valued at more than three billion dollars. It ceased supervising big banks and fintechs for compliance, and made it harder to file complaints against credit-reporting agencies. The timing of this pullback couldn’t be worse. The Federal Reserve has warned that delinquencies on credit cards and auto loans have reached “levels not observed since the Great Financial Crisis.” One in five student-loan borrowers is in default. Total consumer debt has hit a record of nearly nineteen trillion dollars; the median household is eighty thousand dollars underwater. The economy is “K”-shaped, with the rich getting ever richer and the poor skidding down, mired in the feeling, if not yet the fact, of a recession—what the economics writer Kyla Scanlon has termed a “vibecession.” Every day, there are reports of new crypto rackets and wire-transfer scams. “You can step back from consumer financial regulation, and it’s not a problem until something blows up—and then there’s a contagion,” Neale Mahoney, an economist at Stanford, told me. “We won’t know the harm fully until it’s too late.”
From its founding, the C.F.P.B. tried to distinguish itself from other financial regulators—the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency—which labored behind the scenes to insure that banks remained solvent but which meant little to ordinary people. The bureau was set up by Senator Elizabeth Warren, a bankruptcy expert who was then on leave from Harvard Law School. Early meetings were held in the hallways of the Treasury Department, and then in a windowless room known as “the cave.” The C.F.P.B. recruited big-firm lawyers, Silicon Valley coders, Ivy League economists, and hedge-fund alumni, many of whom had never held a government job. Jasmine Hardy joined in 2011, as an examiner in the supervision unit, and later became the vice-president of the employees’ union. During the financial crisis, she had been a compliance officer at Morgan Stanley, and had watched Lehman Brothers employees lug boxes along Seventh Avenue after that firm collapsed. Some nine million Americans would lose their jobs, and there were nearly four million foreclosures. In her view, Dodd-Frank was a necessary response. “I’ve had family and friends who consider themselves conservative who believe in the C.F.P.B. mission,” she told me.
