Democrats and the media—along with federal employee unions—have rallied around the Consumer Financial Protection Bureau, an agency that has been in the sights of the Department of Government Efficiency initiative for its censorship, waste, and hindering of businesses disfavored by the Left, among other issues.
CBS’ “60 Minutes” also aired a highly sympathetic piece about the agency on Sunday with an interview with ousted CFPB Director Rohit Chopra, the Joe Biden appointee whom President Donald Trump fired earlier this month.
Sen. Elizabeth Warren, D-Mass., who as a Harvard law professor was the architect of the agency, denounced the Trump administration and DOGE chief Elon Musk.
The CFPB was established by the 2010 Dodd-Frank financial reform legislation to regulate banks, credit card companies, lenders, and other financial services companies. It is funded through the Federal Reserve.
The agency has had a string of controversies, including censorship, a massive data breach, internal financial waste, and complaints of workplace discrimination.
It will likely take an act of Congress to completely shut it down, but John Berlau, senior fellow and director of finance policy for the Competitive Enterprise Institute, says the agency that has operated outside its legal authority can be reined in.
“Under the Trump administration, the agency should refocus on going on the offense to make it better for entrepreneurs and reversing the damage the Biden CFPB did,” Berlau told The Daily Signal.
Trump named Office of Management and Budget Director Russ Vought acting director the CFPB, which is under the Federal Reserve. Vought eliminated the agency’s budget request for the next quarter and ordered about 1,700 employees not to perform any work.
Rep. Byron Donalds, R-Fla., introduced a bill to eliminate the agency entirely.
A CFPB spokesperson did not respond to an inquiry for this story.
On Feb. 13, the National Treasury Employees Union sued to stop what it called the unlawful dismantling of the agency.
“The employees of the CFPB are nonpartisan professionals who swore an oath to uphold the Constitution, and they believe in the mission of their agency,” union President Doreen Greenwald said in a public statement. “Locking them out of their jobs or firing them is a gift to predatory lenders and unscrupulous actors who prey on consumers.”
A union spokesperson did not respond to an inquiry from The Daily Signal.
Here’s five of the biggest controversies the agency has been involved in.
The CFPB scored a $105,000 settlement late last year with the Chicago-based Townstone Financial, a non-bank mortgage firm, in a case that critics say amounted to policing speech.
“This was German-like censorship by the CFPB,” Berlau said. “No financial services owner is free to speak on a podcast or radio show under this very dangerous precedent.”
Berlau said the Trump administration should cancel the settlement and fire anyone involved.
In 2020, the CFPB sued Townstone, accusing owner Barry Sturner of making “statements that would discourage African-American prospective applicants from applying for mortgage loans.”
However, the lawsuit didn’t identify anyone who was actually discouraged. It said that comments by Sturner on the “Townstone Financial Show” spoke poorly of some Chicago areas and suburbs and said police kept city neighborhoods from “turning into a real war zone.”
But Berlau previously noted that Chicago Mayor Brandon Johnson made similar assertions about crime in Chicago.
The CFPB contended that Townstone drew only five or six applications a year for properties in neighborhoods that were more than 80% African American. The U.S. 7th Circuit Court of Appeals sided with the CFPB in the case.
“The CFPB will continue to prosecute those who engage in modern-day redlining,” Chopra said after the settlement.
Last year, the CFPB settled a decade-old class action racial discrimination lawsuit for $6 million brought by 85 black and Hispanic employees. The agency also paid $1.5 million for attorneys fees.
The case began a decade after The Washington Times first reported on incidents that included a supervisor calling a CFPB bank examiner who wasn’t born in the United States a “f***ing foreigner.’’ In a separate instance, a CFPB department was labeled “the plantation” by its white supervisor for having a high number of African-American employees.
The complaint said the plaintiffs were “minority employees and women … subjected to and harmed by the bureau’s agency-wide pattern or practice of discrimination and retaliation and discriminatory policies and practices.”
CFPB defenders assert it protects consumers when accessing records from financial institutions.
But the CFPB hasn’t yet resolved a 2023 data breach that forwarded the confidential information of 256,000 consumers to a personal email address, Berlau noted.
“They have a broad financial database that has been breached, and it still hasn’t been resolved,” Berlau said.
A CFPB spokesperson said in a statement at the time, “The CFPB takes data privacy very seriously, and this unauthorized transfer of personal and confidential data is completely unacceptable.”
The breach may have contained customer information from more than 50 financial institutions, according to Rep. Bill Huizenga, R-Mich., chairman of the House Financial Services Subcommittee on Oversight and Investigations.
A Federal Reserve inspector general report released in 2014 found renovations for the CFPB’s Washington headquarters exceeded $215 million—or about $120 million over the original estimate.
The House Financial Services Committee noted this was more than $590 per square foot. That meant the agency was spending more per square foot than it cost to build the Trump World Tower in New York, which was $334 per square foot, the Bellagio Hotel and Casino in Las Vegas, which was $330 per square foot, and the Burj Khalifa in Dubai, which was $450 per square foot.
The inspector general report also said the CFPB “was unable to locate any documentation of the decision to fully renovate the building.”
The report said the agency failed to follow all of its own guidelines for gaining approval from its Investment Review Board for the building renovation and that a “sound business case is not available to support the funding of the renovation.”
The CFPB was involved in the Obama administration’s Operation Choke Point debanking initiative, according to a 2015 report by the inspector general of the Federal Deposit Insurance Corporation.
The operation spearheaded by the Justice Department encouraged banks not to do business with gun stores, pawn shops, payday lenders, and other legal industries considered “high risk.” The CFPB reportedly warned banks against disclosing publicly about any of its investigations.