More than a decade and a half ago, I watched Elizabeth Warren bring a crowd in Washington to its feet with a ringing indictment of Wall Street and the toxic mortgage securities that had pushed the American banking system to the brink of collapse in the great financial crisis of 2008. Warren was then a fiftysomething professor at Harvard Law School, and not very well known. Harry Reid, the Democratic Majority Leader in the Senate, had recently appointed her to a congressional panel tasked with examining the seven-hundred-billion-dollar bank bailout that George W. Bush had signed into law in October, 2008. As well as lambasting the bankers for their recklessness and greed, Warren was demanding the creation of a new agency to defend the interests of mortgage holders, savings depositors, credit-card holders, and anybody else who was obliged to deal with banks and other financial companies. In 2010, a Democratic-controlled Congress passed the Dodd-Frank reform act, which created the Consumer Financial Protection Bureau (C.F.P.B). Warren served as an adviser to Barack Obama and helped to get the new agency up and running.
A week ago, Elon Musk tweeted, “CFPB RIP.” In short order, the Trump Administration has shuttered the headquarters of the agency, halted most of its operations, and laid off some of its staff. Since Musk’s démarche, Warren—who was elected to the Senate as a Democrat from Massachusetts in 2013, and is now in her third term—has led the effort to save the C.F.P.B., speaking at a rally outside its offices, tearing into the Tesla C.E.O. in television interviews, and, in a Senate hearing, pressing Jerome Powell, the chairman of the Federal Reserve, to confirm that without the C.F.P.B. there is no government agency to insure that financial companies obey consumer-protection laws.
When I caught up with Warren on the phone, late last week, she recalled that prior to the creation of the C.F.P.B., responsibility for enforcing these laws was split between six regulatory agencies. “It was nobody’s first job, and nothing got done,” she remarked. The founding of the C.F.P.B. brought consumer protection—regulation, supervision, and enforcement—under one roof. “For a dozen years, the C.F.P.B. has been the financial cop on the beat,” Warren went on. “It has found more than twenty-one billion dollars in fraud and scams, and scooped up that money and returned it directly to the people who were cheated. Now Elon Musk comes in and says, ‘Let’s fire the cops.’ What could possibly go wrong?”
Since its inception, the C.F.P.B. has tackled a broad range of abuses by financial firms. Last year, it ordered a reduction in credit-card late fees, which cut the typical payment by more than half, and capped bank overdraft fees at five dollars. In January, a week before Trump’s Inauguration, the C.F.P.B. sued Capital One, the ninth-biggest bank in the country, accusing it of cheating its customers out of more than two billion dollars in interest payments on their savings accounts by failing to inform them that higher rate options were available. (Capital One disputed the agency’s claims and said that it would vigorously defend itself in court.)
The C.F.P.B. has also sought to regulate payday lending, debt collection, and credit ratings. Last month, it announced that its victims’ relief fund, which is financed from fines levied on businesses that break the law, would pay out $1.8 billion to 4.3 million hard-pressed Americans who were preyed upon by a group of now bankrupt firms that used deceptive telemarketing, charged illegal fees, and failed to deliver on promises to repair tarnished credit ratings. In another investigation, staffers at the agency discovered that debt collectors working for hospitals and other medical providers were coercing people into making payments by threatening to report their medical debts to ratings agencies. At the beginning of January, the C.F.P.B. finalized a rule that would prohibit ratings agencies from listing medical debt on credit reports.
Like many of the C.F.P.B.’s actions, this new rule has been challenged in the courts. “The debt-collection agencies were making a ton of money from this practice, so they had a strong incentive to fight,” Julie Margetta Morgan, a former associate director of research at the agency, told me. Right now, it seems possible that the Trump Administration will completely dismantle the C.F.P.B., reverse many of its rules, and settle its outstanding cases on terms favorable to the defendants. If that happens, “it’s open season on everyone who has a credit card, a mortgage, a car loan, a payday loan, a student loan, or uses an online financial app,” Warren said.
Appearing alongside Donald Trump in the Oval Office last week, Musk claimed that slashing spending and downsizing the federal government is necessary to prevent the United States from going bankrupt. But even if financial retrenchment were the ultimate goal of the Department of Government Efficiency (DOGE), it wouldn’t explain why Musk has singled out the C.F.P.B. In 2024, the agency’s budget was capped at $785.4 million, while total federal spending came to $6.75 trillion. A bit of long division shows that the proportion of spending devoted to the C.F.P.B. was roughly 0.01 per cent. If the agency’s entire budget were eliminated for an entire century, it would save about one per cent of the budget for a single year.
Warren and others have pointed out that Musk may well have a personal interest in defanging the C.F.P.B. Since taking over Twitter and changing its name to X, Musk has talked about transforming the platform into an “everything app” offering services like online banking and e-commerce. Last month, X announced a partnership with Visa to create X Money Account, which would enable its users to buy stuff online and make peer-to-peer payments. In theory, such a business could well attract the attention of the C.F.P.B., which has been expanding its authority over big online-payment systems. In December, the bureau sued three of the biggest banks in the country—JPMorgan Chase, Bank of America, and Wells Fargo—for “allowing fraud to fester at Zelle,” a payments system that they co-own along with four other banks. (Zelle disputed the suit as “legally and factually flawed.”) Last month, the C.F.P.B. ordered Block, another payments company, to pay up to a hundred and seventy-five million dollars in restitution and fines, for not providing effective customer service and for failing to take effective measures to detect and prevent fraud.
In some of her public appearances last week, Warren likened Musk’s attack on the C.F.P.B. to a bank robber disarming the alarms as he steps into the lobby. I asked her why so many elected Republicans who aren’t launching a new financial app are also eager to hobble the C.F.P.B. She offered two explanations. First, big banks have loathed the agency since even before it started operating, and they exercise a great deal of influence in the G.O.P. “The banks see themselves having a more profitable future if they can get rid of the C.F.P.B.,” she noted.
The other explanation has to do with ideology: Warren said that this was the heart of the matter. “Republicans have preached a gospel for years that government is always wrong; it’s always stupid; it never gets things right,” she reminded me. “The C.F.P.B. is living, breathing proof, every day, that we can make government work for regular people. That we can use government to level the playing field, so that students don’t get cheated on their education loans, or a family can take out a mortgage to buy a house without worrying there’s a trick back on page thirty-six that means they are going to lose the house in two years. That’s government working the way it should, and it really gets under the skins of the most extremist Republicans.”
I wondered aloud whether attacking an agency that defends the interests of ordinary Americans could ultimately backfire on Trump and the Republicans. Warren said that it could, and, for the first time in our conversation, she voiced some hope for the future: “This little agency has helped millions of people. Letting an unelected billionaire, who’s figured out one more way to grift off the public, knock it out is not a popular move.” The immediate task is to insure the survival of the C.F.P.B., even if in a diminished form, to await a less destructive Presidency. That’s roughly what happened during the first Trump Administration. With Musk and his cohort in wrecking mode, a repeat is far from guaranteed, but one thing is sure: Warren won’t relent in her efforts to save the agency she helped to create. ♦
