Until recently, it appeared that the Consumer Financial Protection Bureau was all but defunct. Soon after Trump returned to office last year, his administration removed Rohit Chopra as director of the agency and replaced him, first, with Treasury Secretary Scott Bessent and then with OMB Director Russell Vought.
The CFPB, which had built a reputation for aggressive enforcement of predatory lending practices, was told to suspend that activity. That included dropping numerous pending cases that had been initiated under Biden. Elon Musk, seeking to obliterate the agency through his DOGE onslaught, tweeted “CFPB RIP.”
After a federal judge prevented the administration from completely pulling the plug, Vought focused on weakening what remained of the agency. Last November, he ordered investigators to abide by a “humility pledge” requiring them to take a less aggressive stance toward corporate miscreants.
Now the CFPB is being used in a novel and pernicious way. The Trump Administration is turning it into a political weapon. The Washington Post reported recently that the agency is looking for ways to prosecute smaller, mostly non-profit community lenders characterized by Vought as unduly “woke.”
That apparently means that they provide financial services to immigrants. A recent executive order from the White House calls on the CFPB to advise lenders that they can consider the possibility of deportation in assessing credit eligibility. Other financial regulators were directed to advise banks to “be attentive to the credit risks posed by the extension of mortgage and auto loans, credit cards, and other consumer credit to the inadmissible and removable alien population.”
Vought is also undoing policies that encouraged banks to improve access to credit in underserved communities. The CFPB has just withdrawn an advisory that was sent to lenders in 2020 in the wake of unrest over the killing of George Floyd to guide them on how to establish special purpose credit programs. This came after the agency changed what is known as Regulation B of the Equal Credit Opportunity Act so that it no longer allows lenders to take factors such as race and national origin into account when designing credit programs to address special social needs.
To cap off all this, Trump has just nominated an executive at Capital One, a major bank and credit card issuer, to be the new director of the CFPB. Brian Johnson served in a high-level position at CFPB during the first Trump Administration and has been a frequent critic of the agency. Law360 writes that his background places him “squarely in the world of Republican lawmakers, regulators and academics [who] look on the CFPB as too powerful and a danger to the financial industry.”
It is difficult to decide whether it was worse when CFPB was dormant or now as it is being transformed into another tentacle of Trump’s anti-DEI and immigrant intimidation crusades.
We can only hope that, amid this MAGA weaponization, the CFPB is still doing some legitimate work. If that is the case, the agency is keeping it quiet. Its website hasn’t reported a new resolved enforcement action in more than a year.
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