Consumer protection under threat? White House moves to defund, disband CFPB

(Originally posted on : Invezz )

The Trump administration escalated its offensive against the Consumer Financial Protection Bureau (CFPB) on Monday, denouncing the consumer watchdog as a “woke” agency whose “weaponization ends right now,” even as a union representing CFPB workers filed suit over a White House-ordered work stoppage.

The salvo came hours after Russell Vought, the White House budget chief appointed acting CFPB director by President Trump, halted more of the bureau’s operations.

The action triggered protests and prompted agency employees to file lawsuits.

CFPB under fire

Created in the wake of the 2008 financial crisis, the CFPB has a broad mandate to safeguard consumers from unfair, deceptive, and predatory financial practices.

Under President Biden, the bureau aggressively exercised its authorities, enacting a series of rules designed to expand access to banking, curb excessive credit card fees, and ensure that digital payment apps protect consumer funds to the same degree as traditional banks.

According to the CFPB, its enforcement efforts have secured roughly $20 billion in refunds and other relief for Americans.

However, Republicans have criticized the agency for overreach in both its regulations and punishments. Billionaire Elon Musk has also attacked the CFPB, especially as the agency has looked to expand its jurisdiction to include major tech companies.

His social media site X recently announced a partnership with Visa involving payments.

Agency paralyzed

By Monday, the Trump administration had effectively brought the CFPB to a standstill.

Vought instructed employees to stay home after moving to halt ongoing investigations and cut off the agency’s access to millions of dollars in federal funding.

According to an agency-wide email obtained by The Washington Post, Vought instructed employees to, “Please do not perform any work tasks.”

The work stoppage has crippled the bureau’s ability to investigate corporate wrongdoing, protect consumers from mishandled accounts, defend existing regulations in court, and supervise banks to ensure financial stability.

Vought and his team extended the directive to include the agency’s contractors, according to a second email later obtained by The Post.

Supporters fear further action: protests erupt in Washington

The administration’s actions have fueled concerns among the agency’s supporters that Trump may seek to lay off staff or shut down the bureau entirely.

Protests erupted outside agency headquarters, with demonstrators chanting anti-Musk slogans, including, “Lock him up.”

“Senators, senators, take the lead,” the protesters chanted. “Stop their power grab, stop their greed.”

While dissolving the CFPB would typically require an act of Congress, Trump has shown a willingness to circumvent lawmakers in shaping the budget.

He has taken similar steps to shutter other agencies whose spending he deems wasteful.

Sen. Elizabeth Warren (D-Massachusetts), who helped found the CFPB, said that “Congress built the CFPB, and no one other than Congress — not the president, not Musk, not Vought — can shut it down,” in a video statement Monday.

A union representing CFPB workers sued Vought in federal court Sunday, arguing that the acting director’s initial orders represent “a precursor to a purge of CFPB’s workforce, which is now prohibited from fulfilling the agency’s statutory mission.”

The National Treasury Employees Union (NTEU) has requested a judge to prevent Vought from taking further actions that might freeze the CFPB’s operations.

The union also filed a second lawsuit against Vought over the work of the U.S. DOGE Service, the team of young aides — convened by Musk — who have embarked on a cost-cutting blitzkrieg upending the nation’s capital.

The NTEU alleged that Musk and his cohort had violated bureau employees’ privacy rights when they gained access to agency computer systems and viewed sensitive personal data.

Lawyers for the NTEU said, “The Bureau has acted contrary to law and regulation by granting DOGE and its members access to the records that the Bureau collects and maintains about every CFPB employee,” in their filing.

White House defends actions: “Woke” agenda under scrutiny

Spokespeople for the White House did not respond to requests for comment from The Post.

However, the White House defended its actions, attacking the CFPB for its “woke” agenda under previous director Rohit Chopra, a Biden appointee, arguing in part that the agency “gave itself the authority to regulate Americans’ checking accounts by dictating government price controls.”

Trump fired Chopra this month, before his term was set to expire.

The White House’s comment appeared to refer to recent CFPB rules that limit the penalties banks can charge customers who overspend their checking accounts.

The Biden-era regulations aimed to spare low-income Americans from debilitating fees, but bank lobbyists have sued to stop them from taking effect, arguing the CFPB had no authority to issue them.

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