- The Consumer Financial Protection Bureau’s HQ was shut down on Sunday.
- Elon Musk, head of the Department of Government Efficiency, wants to eliminate the agency.
- The first director of CFPB told BI that Musk’s calls to dismantle the bureau are “totally unethical.”
The first director of the Consumer Financial Protection Bureau warned against eliminating the independent watchdog agency, telling Business Insider that it would strip oversight of financial firms and harm US consumers.
“We’d be back to the wild, wild west for financial services that affect families all over the country in terms of what their terms would be on their credit cards, on their mortgages, and other products. There would be no oversight of that,” Richard Cordray, who first led the CFBP when it was established in 2011 after the Great Recession to help prevent another financial crisis, told BI.
“Companies could act in their own interests at the expense of consumers,” he added. “It would be as though we were saying to a neighborhood, ‘Go ahead and enforce your laws. We will withdraw the police. We will not have any kind of enforcement of the law.'”
On Sunday, the CFPB told its staff that its DC headquarters would be closed this week and that they should work remotely, according to an email from the agency’s COO, Adam Martinez, that was seen by BI.
On Monday, the CFPB’s new acting director, Russell Vought, told employees in an email seen by BI to “stand down from performing any work task.”
The CFPB in flux
The CFPB has had a shake-up in leadership since Trump took office.
While Martinez has served as the bureau’s associate director and chief operating officer since February 2023, on February 1, Trump fired Rohit Chopra, the former CFPB director under President Joe Biden. Treasury Secretary Scott Bessent took on the role of acting director of the agency until Vought, the director of the Office of Management and Budget, took over the role on February 7.
Vought, CFBP’s new acting director, was an author of the Project 2025 Mandate for Leadership, a conservative road map for the first 180 days of the Trump administration that outlines policy suggestions ranging from dismantling the Department of Homeland Security to scaling back USAID operations — some of which have already been implemented by the Trump White House.
Project 2025’s playbook calls for abolishing the CFPB, calling it an unconstitutional, “highly politicized, damaging, and utterly unaccountable federal agency,” instead recommending the bureau’s consumer protection duties be rolled up under the Federal Trade Commission.
While the FTC has a Bureau of Consumer Protection, which has some overlap with the duties of the CFPB, the CFPB is the only federal bureau completely dedicated to protecting consumers from anticompetitive, deceptive, or unfair business practices in the financial services industry.
In a Saturday post on X, Vought wrote that the “spigot” for the agency’s funding “is now being turned off.”
Elon Musk calls for the end of CFPB
Vought’s move comes after Elon Musk, the head of DOGE, repeatedly called to eliminate the agency as part of his broader effort to slash federal spending. “RIP CFPB,” he said on X.
The CFPB’s oversight of the financial industry has included a lawsuit filed against Capital One over allegations that it illegally charged customers over $2 billion in interest, the return of money to student-loan borrowers from private lender Navient, and rules to cap overdraft fees and remove medical debt from credit reports.
Cordray said Musk’s targeting of CFPB could be a conflict of interest, considering X has plans to provide financial services on the platform.
Musk has shared his ambitions to turn his social media company into an “everything app,” including a digital wallet and payment system. On January 28, X CEO Linda Yaccarino announced a partnership with Visa that will allow peer-to-peer money transfers with what the company calls XMoney, set to debut later this year.
“It’s a direct conflict of interest and totally unethical for him to be making judgments about how the CFPB should exist that are not legislated by Congress and that might serve his own financial interests at the expense of the public across the country,” Corday said.
Representatives for the White House, Musk, and the CFPB did not respond to requests for comment from Business Insider.
Ricky Carioti/The Washington Post via Getty Images
Congress established the CFPB under the Dodd-Frank Act and gave it the regulatory authority to enforce and expand on existing laws, such as the Consumer Financial Protection Act, meant to protect consumers and guide financial firms.
The agency is funded by the Federal Reserve instead of Congress’ appropriations process, which has led to criticism from many lawmakers who say Congress should oversee the CFPB’s funding.
“The CFPB was supposed to be bipartisan — in a way nonpartisan and actually independent of politics — and meant to implement good policies to protect American consumers,” Antoinette Schoar, a finance professor at MIT Sloan School of Management, told BI. Schoar was a CFPB’s inaugural advisory board member, lending her expertise in consumer finance to help develop some of the bureau’s policies.
Musk vaguely acknowledged the CFPB’s contributions on Thursday, saying that “they did above zero good things, but still need to go.”
Escalating attacks on the bureau
The X owner’s desire to shut down CFPB also reflects President Donald Trump’s opposition to the consumer watchdog agency. During his first term, Trump took steps to reduce the CFPB’s influence and appointed Mick Mulvaney as its acting director.
Trump “spent four years in the Oval Office and obviously the CFPB shifted direction during that time pretty dramatically, was much more timid, and not aggressive on behalf of consumers,” Cordray said. “But they did enforce the law.”
Under the new Trump administration, things are different: Treasury Secretary Scott Bessent recently ordered the CFPB to halt most of its work and pause all public communications, an email obtained by Business Insider showed.
The National Treasury Employees Union, which represents employees in the CFPB, on Sunday filed suit against Vought, urging a judge to block DOGE officials from accessing employee information and to block Vought’s directives to “cease all supervision and examination activity” and “cease all stakeholder engagement.”
Cordray said that Musk has no authority to “delete” the consumer watchdog agency, saying that “Congress is the lawmaking authority in the country” and that Musk “is not the Congress.”
Democratic Sen. Ed Markey of Massachusetts said in a post on X on Saturday that Musk’s role was a “blatant conflict of interest.”
“Elon wants the CFPB gone so tech billionaires can profit from apps, like X, that offer bank-like services but don’t follow financial laws that keep people’s money safe,” the senator wrote. “Musk wants to use the government to put more in his pockets.”
The White House recently designated Musk as an unpaid “special government employee,” which means the billionaire isn’t subject to the standard ethics and conflict-of-interest rules that official government employees typically encounter.
One of the laws introduced as part of the Ethics Reform Act of 1989 stipulates that federal workers, including an SGE, are prohibited from making government decisions that impact their financial interests.
However, the law has an exception that says the official appointing the SGE can grant a waiver if the worker’s services are deemed in the public interest and outweigh the potential conflict.
