The CFPB: A Year of Turmoil and Change

A Rocky Start to 2025

In early 2025, the Consumer Financial Protection Bureau (CFPB) experienced a dramatic shift. Employees were instructed to halt their work, offices were closed, but staff remained at home, unable to perform their duties.

This abrupt change was part of a broader strategy by the Trump administration aimed at shrinking the agency. Funding was cut, and plans were set in motion to lay off most of the staff.

The CFPB's Mission and Achievements

Created by Congress in 2010 following the financial crisis, the CFPB's primary role is to protect consumers from fraud and predatory practices. Over the years, the agency has successfully returned $19.7 billion to consumers.

Critics and Controversies

Despite its achievements, the CFPB has faced criticism. Detractors argue that the agency overreaches and negatively impacts small businesses. One of its vocal critics, Russell Vought, became the acting director in February 2025. Vought was part of a project aimed at abolishing the CFPB. Shortly after assuming his role, he directed employees to cease their work.

Employee Reactions and Legal Battles

Many employees chose to resign, while others were laid off. The union representing the employees filed a lawsuit to halt the layoffs. A judge granted a temporary restraining order, pausing the layoffs and other actions. However, the legal battle was far from over.

Congress significantly reduced the agency's budget. The administration contended that the CFPB could not receive funding from the Federal Reserve. In response, a coalition of state attorneys general filed a lawsuit. A judge ultimately rejected the administration's argument and ordered Vought to request the necessary funds.

The Impact on Consumer Protection

Even as some duties resumed, the agency's work has been significantly rolled back. Complaints about businesses sent to the CFPB surged by 89% in December 2024 compared to the previous December. With the agency's capabilities diminished, it remains unclear whether these complaints are being addressed effectively.

Concerns and Alternative Actions

Some critics of the agency express concern that Congress, rather than the administration, should be responsible for dismantling the CFPB. In the absence of federal action, state and local officials have stepped in to fill the void. For instance, New York Attorney General Letitia James led an investigation that resulted in Capital One paying $425 million in restitution.

Affordability and the CFPB's Role

The CFPB's work is closely tied to affordability. However, while the president has emphasized affordability as a priority, the agency has been sidelined. Rules implemented by the CFPB to limit fees and protect consumers have been repealed or not enforced.

A Year of Turmoil

The administration claims to be pursuing ways to alleviate the affordability crisis. Yet, the CFPB, which could play a pivotal role in this effort, remains non-functional. The year 2025 has been one of turmoil and significant change for the agency.