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Quick hits.
- Marc Fogel was freed from Russian prison after President Donald Trump’s special envoy, Steve Witkoff, negotiated his release. Fogel, an American schoolteacher, had been arrested in 2021 for cannabis possession and sentenced to 14 years in prison on drug-trafficking charges. The Biden administration classified him as wrongfully detained in 2024. (The release)
- President Trump signed an executive order instructing the heads of federal agencies to work with the Department of Government Efficiency (DOGE) to reduce the federal workforce. (The order)
- Canadian Prime Minister Justin Trudeau said Canada would pursue retaliatory measures if President Trump’s 25% tariffs on all steel and aluminum products entering the United States go into effect next month. (The comments)
- President Trump hosted Jordan’s King Abdullah II at the White House, where the two discussed Trump’s proposal to resettle Gazans in surrounding Arab countries. Abdullah told Trump that Jordan would take in 2,000 Palestinian children with severe illnesses, but reiterated his opposition to resettling Gazans en masse. (The meeting)
- More than 90 million Americans are under winter weather advisories or warnings on Wednesday, with snow and ice storms forecast for large swaths of the Midwest and East Coast. (The storms)
Today's topic.
Defunding the Consumer Financial Protection Bureau. On Friday, Office of Management and Budget Director Russell Vought took over as acting head of the Consumer Financial Protection Bureau (CFPB) and ordered the agency to grant officials from the Department of Government Efficiency (DOGE) access to its non-classified systems. Over the weekend, Vought directed CFPB employees to “stand down from performing any work task,” then announced the CFPB’s Washington, D.C., office would be closed through February 14.
Back up: In the wake of the 2007–08 financial crisis, Congress passed the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, establishing the CFPB to review the activity of financial services firms and protect consumers from predatory practices. Before her election to the Senate, then-Harvard law professor Elizabeth Warren (D-MA) proposed the creation of the agency, then served as a special adviser to the Treasury secretary to launch operations in July 2011. The agency’s core functions include creating rules to protect consumers from deceptive financial practices, enforcing consumer financial protection laws, and investigating consumer complaints about financial companies.
Unlike other federal agencies, the CFPB is funded through money transfers from the Federal Reserve Board of Governors (rather than congressional appropriations). Some lawmakers have objected to this funding mechanism for lacking accountability to Congress, and in 2024, the Supreme Court heard a challenge to the system’s structure, ruling 7-2 that the CFPB’s structure is constitutional.
In his weekend email to CFPB staff, Vought instructed agency staff to pause any pending investigations, new rule proposals and stakeholder engagements, then posted on X that he had “notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not ‘reasonably necessary’ to carry out its duties.” Furthermore, agency employees are reportedly preparing for significant headcount reductions, as only a few hundred of its roughly 1,700 employees have positions that are required by law to exist.
Many Democrats have criticized the moves by Vought and Musk, and Sen. Warren vowed to fight any effort to shutter the agency’s operations. “CFPB is there to make sure Elon Musk’s new project cannot scam you and steal your personal data… We will fight it out in Congress, in courts and across this country,” Warren said. Republican lawmakers mostly support the moves, with Rep. Byron Donalds (R-FL) calling the CFPB a “highly-partisan” and “unaccountable” agency that should be eliminated.
On Tuesday, two of the CFPB’s top officials resigned, stating that they could not continue their work amid the upheaval at the agency. Separately, a union representing employees across dozens of federal agencies filed lawsuits to challenge Vought’s apparent shutdown of the CFPB and block DOGE staffers from accessing the agency’s records.
Today, we’ll share perspectives from the left and right about the recent moves at the CFPB. Then, Managing Editor Ari Weitzman gives his take while Executive Editor Isaac Saul is on paternity leave.
What the left is saying.
- The left criticizes the impending shutdown, suggesting it’s plainly illegal.
- Some say the CFPB is a vital defense against predatory financial practices.
- Others argue the agency is a prime example of government working effectively.
In The American Prospect, David Dayen called Vought’s actions “illegal.”
“No federal agency has had a bigger target on its back in the last 15 years than the Consumer Financial Protection Bureau. Pro-business conservatives are simply offended by an agency with a mission to protect ordinary people, the lowest rung on America’s totem pole, from financial scams, and they have yearned to litigate, legislate, and intimidate it out of existence,” Dayen wrote. “Frustrated in Congress and the courts, MAGA has turned to snuffing out the CFPB by executive fiat.”
“Litigation is likely to get some aspects of the CFPB working again. And some unlikely participants may support that litigation. Back in 2023, when right-wing advocates tried to render the CFPB’s funding mechanism unconstitutional, mortgage bankers freaked out, because they realized that the rules the bureau administers, updates, and modifies are actually critical to smooth functioning of consumer financial markets,” Dayen said. “For now, the zealots who welcome this kind of chaos are winning out, temporarily. And the agency that has returned over $21 billion to victims of financial fraud, abuse, and deception since its creation in 2010 is on ice.”
In MSNBC, Helaine Olen said closing the CFPB “will help Elon Musk — but hurt the rest of us.”
“Musk and his lackeys aren’t trying to shut down the CFPB because of such stated reasons as attacking the deficit or combatting overbearing bureaucracy. Instead, the attempted shutdown of the CFPB is an overt power grab by Big Tech — and their gain could result in the rest of us losing much more than almost anyone realizes,” Olen wrote. “Wall Street and now Big Tech don’t hate the CFPB because it’s an ineffective waste of money. They hate it because this relatively small agency punches way above its weight. Since the CFPB opened its doors in 2012, with a budget well under $1 billion a year, it’s returned more than $21 billion to Americans, protecting them from big banks’ abuses, fintech scams and multitudes of junk fees.”
“Under director Rohit Chopra — who ran the agency for most of Joe Biden’s presidency — the CFPB not only aggressively protected Americans against the big banks and traditional nonbank financial services, pushing back on excessive check overdraft charges, credit card abuses and the like,” Olen said. “No one in this White House appears interested in better or more efficient consumer financial regulation. Instead, the tech titans are seeking to expand their monopolies into financial services — preferably without the CFPB referees standing in their way.”
In Slate, an anonymous attorney at the CFPB wrote about the upheaval at the agency.
“My colleagues and I work tirelessly to protect the American public from predatory, unfair, and illegal practices by bad actors in the market for consumer financial products, like credit cards, mortgages, and student loans. We are a relatively small group of government employees who enforce federal financial laws, including by bringing cases against those who violate them,” the author said. However, “since the DOGE takeover, and in the past 72 hours, Vought and Musk have worked hand in hand and with unnerving speed to strip the CFPB for parts and bring its work to a screeching halt.”
“The CFPB now stands as an ineffective watchdog—chained, muzzled, and left to starve in its kennel so that it can no longer guard the public. This is profoundly sad for the employees like me who have worked zealously to protect the American public from frauds and scams, day in and day out,” the author wrote. “I remember the misery that the Great Recession inflicted on American consumers. I am worried for what may happen now that the CFPB can no longer guard against the next crisis, thanks to Vought, Musk, and their unaccountable wrecking crew.”
What the right is saying.
- The right mostly supports shutting down the CFPB, with many saying that the agency no longer fulfills the mission it was created for.
- Some worry that dismantling the CFPB would strip protections for conservatives who are targeted by financial firms for their political views.
- Others say Trump and Congress should work in concert to eliminate the agency.
In Reason, Veronique de Rugy wrote “abolish the CFPB.”
“Picture this: a government agency that operates with little accountability, spends taxpayers' money without congressional oversight, and enforces regulations based on flimsy theories about consumer behavior. That's the Consumer Financial Protection Bureau (CFPB), an institution so misguided in both mission and execution that it does not deserve mere reform—it should be abolished outright,” de Rugy said. “Heralded as the savior of consumers after the 2008 financial crisis, the CFPB has instead become a regulatory monster that stifles innovation and drives up costs for the very people it claims to protect.”
“What was the CFPB given all this power to do? In theory, it is to protect and empower consumers, promote fair and competitive markets, and stabilize the financial system. In practice, it has reduced access to credit cards for lower-income consumers and jacked up bank fees and mortgage costs. CFPB bureaucrats also love price controls and excessive regulations, and they despise financial arrangements that they view as unconventional,” de Rugy wrote. “At the heart of the CFPB's misguided decisions is its leaders' apparent belief that consumers are helpless, irrational beings incapable of making good financial decisions without bureaucratic intervention.”
In UnHerd, Sohrab Ahmari said Musk’s efforts to eliminate the CFPB are “a danger to Trumpism.”
“Last month, [then-CFPB Director] Rohit Chopra proposed to restrict financial institutions from dropping customers based on their political or religious views. If adopted, the rule would have been the most politically significant of Chopra’s many reforms: after all, Right-wing activists have been the most frequent victims of debanking,” Ahmari wrote. “Yet in the weeks leading up to President Trump’s inauguration, powerful tech barons vented rage at Chopra’s agency… Musk, whose Department of Government Efficiency (DOGE) is dramatically remaking the federal government, gloated about the agency’s apparent demise with a tombstone emoji, adding: ‘CFPB RIP’.”
“Unless Team Trump changes course, the plutocratic, self-dealing policy choices will become impossible to ignore. And the Trumpians will end up betraying the millions of working-class and union households who pulled for them in last year’s election seeking immigration sanity and economic protection — not to make it easier for Big Finance to surveil and debank them,” Ahmari said. “Trashing [the CFPB] would do nothing to address the structural power imbalances which bedevil Trumpian America and which compelled it to vote for him in the first place. On the contrary, it would exacerbate the imbalances.”
In Fox News, Patrick Brenner argued Trump should “delete Elizabeth Warren’s failed experiment once and for all.”
The CFPB “was initially sold as a watchdog for consumer interests. In reality, it has evolved into an unchecked behemoth that stifles competition, raises consumer costs and meddles in industries far beyond its intended scope,” Brenner said. “The Supreme Court’s 2024 ruling upholding the CFPB’s funding structure emboldened Chopra to escalate the agency’s crusade against financial institutions and fintech companies. But the ruling didn’t endorse the agency’s wisdom or legitimacy. Congress created the CFPB, and Congress — or, better yet, a motivated Trump administration — can dismantle it.”
“The CFPB’s recent attempt to expand oversight of Big Tech’s payment platforms, including Musk’s X Payments, was a glaring example of its mission creep. While initially designed to oversee financial products, the agency under Chopra increasingly sought to police non-financial businesses, threatening to strangle competition and restrict consumer access to innovative financial tools,” Brenner said. “The CFPB is not a long-standing pillar of American governance, but a failed experiment of Sen. Elizabeth Warren’s progressive regulatory vision. Its unchecked authority, lack of congressional oversight, and hostility toward financial markets make it a danger to businesses and consumers.”
My take.
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- The CFPB was created to address a pressing issue and has largely been effective in its work.
- However, some of its efforts have brought unintended consequences, and its core functions could be absorbed by existing agencies.
- While I support reforming the CFPB’s structure, Musk and Vought aren’t the right people to do it.
To put my cards on the table, as someone who entered the workforce during the Great Recession, I’ve always been partial towards more regulation in the financial sector than less. Accordingly, I’ve regarded the CFPB somewhat optimistically. But if I ask myself one simple question, I’m not so sure of the answer: If you wanted the government to do what the CFPB does today, is this the best way to do it?
Let’s start from the beginning: After the 2008 financial crisis, the electorate was hungry for reform. In 2011, 83% of U.S. adults said that Wall Street needed stricter regulation, and 67% said bankers would break the law without robust controls. Into this arena stepped a first-term president who had won a sweeping electoral victory on the message of hope and change. To supply the clamored-for financial reform, he took up an idea from a Harvard bankruptcy and commercial law professor named Elizabeth Warren to authorize a new agency that would provide financial oversight — one that could centralize regulatory enforcement into one bureau, with funding draws insulated from annual congressional appropriations, under the neutral oversight of the Federal Reserve.
Then, in 2010, President Barack Obama signed the Dodd-Frank Act into law, bringing now-Sen. Elizabeth Warren’s (D-MA) idea to life: The Consumer Financial Protection Bureau (CFPB). In its 15 years of life, the agency has taken on payday lenders, junk fees, and late charges. At the same time, it has withstood legal challenges to its constitutionality from Republicans, who see it as overzealous and bereft of adequate oversight.
In short, the CFPB has been one of the biggest wins Democrats have achieved in the last 20 years — delivering reform at a time when voters wanted it (the 2008 financial crisis), fixing its sights on a villain most voters still despise (Wall Street), and cleverly designing it (a mark of ingenuity rarely seen from Congress) to withstand the entirety of President Donald Trump’s first term.
As a significant legislative victory for Democrats, the CFPB is a natural target for Congressional Republicans.
And to be fair, they have good reason to complain. The regulations the CFPB has passed have resulted in some serious unintended consequences. After the CFPB limited junk fees, banks increased credit card interest rates to recoup losses. When it imposed rules on mortgage providers, the availability of mortgage credit regressed. It has also created solutions to problems that didn’t need to be solved, like when it regulated financial comparison tools. The CFPB has certainly benefited consumers, to the tune of tens of billions of dollars — but Republicans are right to question whether the costs of the downstream effects of its work are greater than its benefits.
Not only does the CFPB advance a model of economic regulation that conservatives generally decry, but the ingenious funding structure Warren proposed for it is also pretty dubious. The president is allowed to fire the head of the agency, but cannot remove or restructure the agency itself. The executive branch can install a new head who asks for no funding, but it can’t eliminate its funding mechanism entirely. Congress can control the agency’s funds, but not through normal appropriations. The CFPB is simply an outlier among the executive agencies. Not only that, but the agency’s purview could be amply covered by existing agencies that regulate financial institutions, like the Federal Trade Commission, the Securities and Exchange Commission, or the Financial Crimes Enforcement Network (FinCEN).
While its structure is undeniably unusual, it is not unconstitutional. Its funding is authorized by pre-existing legislation, meaning that the same process that makes its funding stand out among executive departments makes its spending fit right in with two thirds of the federal budget. As Justice Brett Kavanaugh said about the CFPB during last year’s Supreme Court challenge, “Congress could change it tomorrow, and there’s nothing perpetual or permanent about this.” Furthermore, it’s not the shadowy agency many critics paint it to be — it publishes semi-annual reports that are accessible and transparent, and Congress has held multiple hearings to examine its work.
Still, being legal is a pretty low bar to clear to justify its structure. I doubt Democrats would be very happy if this Congress enshrined a “deportation task force” funded by a set proportion of the Department of Homeland Security’s budget untouchable by the normal appropriations process.
This all leads me back to my initial question: If you wanted the government to do what the CFPB does today, is this the best way to do it? I don’t think it is. It is a duplicative agency. Its operational scope is disconcertingly broad. And even though I personally have no problem with its funding mechanism (if Congress wants to change its funding, it can pass a piece of meaningful legislation that isn’t an omnibus appropriations bill), it is an outlier among federal agencies. Merging the CFPB with FinCEN, giving it a healthy operating budget subject to congressional appropriations, and retaining the smooth public interface the CFPB currently presents strikes me as a good path forward.
But that isn’t the path that Musk, Vought, and Trump are following. Vought is within his rights to request $0 to operate the agency — something that isn’t a coup or even novel (Mick Mulvaney did the same thing in 2018). I’m less certain that abruptly downsizing the non-essential staff is legal, but the courts are working that part out now. Musk’s role, however (and again), is unhelpful at best and downright corrupt at worst. Remember: the CFPB is investigating and regulating companies Musk runs, and his involvement with the bureau is as clear an ethical breach as I can imagine. What happens to the CFPB’s ongoing investigations? Who is responsible for enforcing regulation of the consumer financial market in the meantime?
All told, the ongoing saga with the CFPB reminds me of another ongoing saga over an Obama-era reform: the Affordable Care Act. Republicans have wanted to “repeal and replace” Obamacare since it was enacted, and for just as long haven’t articulated a replacement plan.
Republicans haven’t suggested how they’ll cover the CFPB’s bases while downsizing the bureau to oblivion. At the same time, Democrats who support the CFPB have to reckon with the fact that the ingenious defenses in Warren’s design are prompting ingenious attacks. As National Review’s Noah Rothman put it, “Democrats and Republicans talked past one another, with the latter emphasizing the outfit’s legal impropriety and the former focusing on all the noble works enabled by that unseemliness.”
Perhaps my question of whether the current CFPB is the best tool for the job it’s tasked with isn’t the most important one to ask. Rather, are Vought and Musk the right people to fix it? That’s an emphatic no. Unless Congressional Republicans can proffer their own tools to complement Vought’s axe, then tying the CFPB’s hands is going to do a lot more harm than good.
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Your questions, answered.
Q: I've been noticing that the comments section over the past few months has become increasingly volatile toward you, Tangle, and even other Tangleers. This is very evident when you report on Trump, where it seems no matter what position you take you will receive a significant backlash, and Tangleers will attack each other over differing views. I do sometimes get caught up in it as well. It's disheartening.
Has this affected how you report on Trump and other contentious topics? If you agree, what are your feelings toward this trend? Do you feel that Tangle's current format is adequate for such hot topics?
— D. A. K. from Providence, RI
Ari Weitzman, Managing Editor: First of all, “Tangleers” is awesome. I love that there’s a name for active Tangle community members. Second of all, I know what you mean. As we transition from “campaign coverage” to “administration coverage,” we’re writing about “Trump the Elected Official” for the first time for many readers. Trump the Candidate has theoretical policies, and it’s possible to discuss them dispassionately; with Trump the Elected Official’s actual policies, it’s impossible.
At the same time as Trump has taken office, we’ve also been blessed by a huge influx of readers — not only did we increase our readership by over 100,000 subscribers in one month after we were featured on This American Life, but since Executive Editor Isaac Saul left for paternity leave we’ve added another 20,000. Everyone that’s here is drawn to the same promise of Tangle that we’ve had since before I started working as a lowly contract-editor for Isaac’s one-man show: engage with differing perspectives, and be a source of news everyone can trust regardless of their politics.
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Under the radar.
The Trump administration has decided not to release White House visitor logs during the president’s second term, continuing the policy of his first administration. Presidents are not required to make this information public, as visitor logs are subject to the Presidential Records Act and do not need to be released until five years after a president has left office. Furthermore, past administrations have historically kept them private. However, Presidents Barack Obama and Joe Biden released visitor logs during their terms in response to requests from groups on the right and left (though some of the Biden records were incomplete). Now, Trump has opted to discontinue the practice during his term. The Washington Examiner has the story.
Numbers.
- $161 million. The CFPB’s funding request from the Federal Reserve for its budget in fiscal year 2011.
- $721 million. The CFPB’s funding request from the Federal Reserve for its budget in fiscal year 2023.
- 76.9%. The annualized growth in spending by the CFPB between 2011 and 2014.
- 10.2%. The annualized growth in spending by the CFPB between 2020 and 2023.
- $21 billion. The approximate amount of monetary compensation, principal reductions, canceled debts, and other consumer relief stemming from CFPB enforcement actions and supervisory work, as of December 3, 2024.
- 205 million. The estimated number of consumers or consumer accounts eligible to receive relief from the CFPB’s enforcement and supervisory work.
- 6.8 million. The approximate number of consumer complaints sent to companies for response by the CFPB.
The extras.
- One year ago today we covered the Biden special counsel report.
- The most clicked link in yesterday’s newsletter was our previous coverage of Lia Thomas.
- Nothing to do with politics: A dictionary for idioms in every language: untranslatable.
- Yesterday’s survey: 4,306 readers answered our survey on whether trans women or girls should be allowed to compete in female sports, with 45% saying they should never be allowed. “There are biological differences that mandate that men should not participate in women's sports. Nonsense we have to have an EO for this,” one respondent said.
Have a nice day.
Adam Simmonds and Michael Brown are co-founders of Home Kitchen, the first fine-dining restaurant run entirely by homeless people. As part of its effort to change the public’s perception of what it means to be homeless and combat economic barriers of homelessness, the restaurant provides each staff member with a pre-paid travel card for transportation, funds for a catering qualification, and of course, a wage that covers their basic needs. “We’re here to do a job, build ourselves up,” an employee named Jeremy shared. The Good Good Good has the story.
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