The Consumer Federation of America released the following statement in response to Saturday’s announcement that the Consumer Financial Protection Bureau would halt supervisory work. 

“The CPFB was created after excessive risk-taking by financial companies, many of whom were not supervised by a federal regulator, crashed our economy,” said Adam Rust, director of financial services for the Consumer Federation of America. “Millions of people lost their homes, work, savings, and businesses. It was created to protect people, not empower Elon Musk. If this administration chooses to cover its eyes from the facts, people will be put in harm’s way. This is a free pass for financial institutions to take advantage of consumers.”

Background

• The CFPB has exclusive supervisory authority for federal consumer financial law for insured depository institutions with more than $10 billion in assets and their affiliates. Those institutions hold more than 80 percent banking assets.It is the only federal regulator overseeing non-banks.
• The CFPB oversees a large portion of financial markets. Congress gave the CFPB authority to oversee non-banks in certain specified markets, regardless of their size: mortgage companies (originators, brokers, servicers), payday lenders, private education lenders, and any non-depository that it has “reasonable cause to determine by order….is engaging or has engaged in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products and services.” It also gave the CFPB permission to establish supervisory authority for “larger participants” in other markets. The CFPB has completed steps to assume supervisory authority over student loan servicers, consumer debt collection, consumer reporting, international money transfers, payment apps, and automobile financing. 
• No one else will step in to replace the CFPB. Congress transferred the consumer financial protection functions of the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve, and the National Credit Union Administration to the CFPB. It also transferred several of the financial protection activities of the Department of Housing and Urban Development. Unless Congress passes legislation, the suspension of supervisory work by the CFPB will not result in those responsibilities being returned to the agencies that formerly had them.
• If the CFPB can’t do its job, no federal regulator will be able to prevent Elon Musk from building a financial services company. This is an unprecedented action. The Trump Administration already gave Elon Musk access to the Treasury’s payment system. Now he is being empowered to see private financial information about consumers and companies. An agency designed to protect people is being shredded to bring more profits to an out-of-control billionaire. 

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