I served a full one-year term as a Visiting Scholar at the Consumer Financial Protection Bureau (CFPB) and know firsthand the bureau's importance in consumers' daily lives.
The Consumer Financial Protection Bureau (CFPB) was established in response to the 2008 financial collapse. It is tasked with protecting consumers from unfair, deceptive, or abusive practices and educating them about their rights in the financial marketplace. Moreover, the CFPB works to ensure that banks, lenders, and other financial institutions treat consumers fairly.
The CFPB also regularly monitors financial markets for emerging risks, creates and enforces regulations, and provides a platform for consumers to submit complaints about financial services.
On February 9th, Trump-appointed CFPB Director and former hedge fund manager Scott Bessent ordered these operations to stop immediately, putting consumers and our financial system at risk.
As shared in an exchange between the U.S. Senator Elizabeth Warren and Federal Reserve Chairman Jerome Powell, no federal regulators currently provide oversight or enforcement over the "Big Banks" due to their halt in operations.
To be specific, Senator Elizabeth Warren of Massachusetts asked Powell during his appearance before the Senate Banking Committee:
"If the CFPB is not there, examining these giant banks to make sure they are following laws on not deceiving consumers, who is doing that job?"
"I can say no other federal regulator." - Federal Reserve Chairman Jerome Powell
This is not an attempt to save taxpayers money. The CFPB funds its operations through monetary transfers from the Fed's combined earnings, not tax dollars. Although this funding source was challenged in the courts, it was upheld in a Supreme Court Ruling of 7-2 in May 2024.
There has yet to be a reasonable explanation for the decision to expose consumers and our financial system to the very dangers it was tasked to defund us from. Here is an overview of the job CFPB has done in its short history.
CFPB has obtained over $17.5 billion in refunds and other relief for an estimated 200 million Americans mistreated by financial firms.
CFPB has fielded more than 3,850,000 complaints from consumers since launching the database, and 98% of complaints forwarded to companies get timely responses.
The CFPB has imposed $5 billion in civil money penalties on companies and individuals that violate the law.
CFPB has fined and banned some student loan servicers for defrauding student borrowers.
CFPB finalized a rule to remove medical bills from credit reports and end coercive debt collection practices that weaponize the credit reporting system.
As consumers, we are helpless against some actions by the big banks without the CFPB. A more specific example is that in 2022, the CFPB fined Wells Fargo $3.7 billion for widespread mismanagement of auto loans, mortgages, and deposit accounts.
The power of a fair and well-regulated marketplace allows capitalism to work for us. Halting that work is unprecedented and dangerous.
Although we can't entirely protect ourselves, we can take additional precautionary steps. Here are three ways you can protect yourself right now.
1. Place a Security Freeze on New Bank Accounts
Click here to place a security freeze on your ChexSystems report, which prevents others from opening new accounts in your name without your consent. This can help protect you from identity theft, and hopefully the banks themselves.
If you recall, the CFPB previously fined Wells Fargo $100 Million for the widespread illegal practice of secretly opening unauthorized accounts.
2. Check Your Credit Report
Checking your credit report is crucial for maintaining financial health and credit history accuracy, and is of particular importance now. It allows you to identify errors or fraudulent activities early, which can help protect your credit score—a key factor influencing loan eligibility and interest rates.
Fortunately, you're entitled to one free credit report each year from each of the three major credit reporting companies—Equifax, Experian, and TransUnion. To access your free annual credit report, simply visit AnnualCreditReport.com.
Past research has found that nearly half of credit reports include an error, which you can dispute. Although instructions and resources to do so fall under CFPB's responsibility, I found an old post from the FTC that explains the process if the entire CFPB website is taken down.
Just three days before the new administration took over, the CFPB ordered Equifax to pay $15 million for improperly investigating credit reporting errors.
3. Freeze Your Credit
A credit freeze prevents you or others from opening accounts in your name.
Under federal law, you can freeze and unfreeze your credit record for free at the three nationwide credit reporting companies – Experian, TransUnion, and Equifax.
A federal law requiring free security freezes does not apply to someone who requests your credit report for employment, tenant screening, or insurance purposes.
You can freeze your credit file at any time, but you must contact each credit reporting company.
Equifax: Take control of your Equifax® credit report, (800) 685-1111
Experian: Security Freeze, (888) 397-3742
TransUnion: Credit Help, (888) 909-8872
I have gone through the credit freeze process, and it's a hassle, but if you're worried about identity theft and want to take an additional precaution, it might be worth your time.
What Next?
We cannot let our financial system be stripped of the protections designed to keep us safe. The CFPB should not be eliminated, paused, or stripped of its authority.
If you want to take action, click here to contact your representatives.
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