The Consumer Financial Protection Bureau, the consumer watchdog agency designed by Sen. Elizabeth Warren (D-MA) that has been under constant Republican assault since it opened its doors in 2011, has emerged from the early days of Trump’s second term significantly downsized and limited but still alive.

The GOP One Big Beautiful Bill Act cuts the agency’s annual budget by 46%. The defunding comes atop administrative efforts by the Trump administration to largely stop its work of regulating mortgages, credit cards, bank accounts, and other financial products.

Recommended Stories

• Top housing regulator Bill Pulte emerges as Trump's biggest attack dog
• US automakers report losses in first signs of Trump tariff effects
• Trump tariffs on Canada could increase domestic cost of homebuilding by $14,000: Report

Republicans on the Senate banking committee initially proposed eliminating CFPB federal funding altogether, but the Senate parliamentarian ruled that such a move was not permitted under the procedures guiding the bill’s passage.

As a result, the agency, long hated by conservatives and many in the financial industry, will live on, albeit in a significantly scaled-back form.

“Cuts from the megabill will undermine the CFPB’s work, but the parliamentarian recognized the excessive cuts as a partisan policy maneuver, meaning that once again the CFPB survived efforts to destroy it,” Adam Rust, the director of financial services at the Consumer Federation of America, told the Washington Examiner.

Specifically, the bill reduces the CFPB’s funding from the Federal Reserve from 12% to 6.5% of the Fed’s total operating expenses, resulting in a $2 billion budget cut.

In designing the CFPB, which was created as part of the 2010 Dodd-Frank reform law, Democrats designed it to be insulated from industry pressure and to have wide discretion to pursue regulatory action against banks and financial firms. That’s why they gave it funding from the Fed, rather than from Congress, and structured it as an independent agency led by a single director, rather than a commission like the Securities and Exchange Commission.

Over time, Republicans advanced legislation to shutter the agency but failed to get such measures signed into law. CFPB opponents have had one notable success with litigation: In 2020, the Supreme Court ruled that the president could fire the director of the CFPB at will. In 2024, though, the court rejected the argument that it is unconstitutional for the agency to get its funding from the Fed.

One reason that conservatives have fallen short of their goal of eliminating the CFPB is that it is not unpopular. Jeff Sovern, a law professor at the University of Maryland, cited polling performed in 2024 that found that 77% of Republicans support the bureau.

“Republican officeholders may want to eliminate the CFPB, but if the polls are accurate, their constituents have a different view, which may affect the officeholders’ eagerness,” Sovern told the Washington Examiner.

Polling conducted by allies of the agency in March found that two-thirds of people support the CFPB when read a description that highlights its work preventing fraud.

Republicans and free-marketers have long argued that the CFPB is unaccountable and that it harms markets through overregulation.

The agency has “gone far beyond protecting consumers from fraud deception,” and has worked “to limit consumer choices,” said John Berlau, the libertarian Competitive Enterprise Institute‘s director of finance policy.

During President Donald Trump‘s first term, the administration sought to pursue deregulation through rulemaking, first under acting director Mick Mulvaney, a staunch conservative who served simultaneously as Trump’s budget director, then under former GOP staffer Kathy Kraninger.

Under former President Joe Biden, though, the agency took a more expansive view of authority, targeting profitable practices by banks — including overdrafts, credit card late fees, credit reporting, and medical debt. When Trump retook office, the pendulum swung back even further, and the administration has dramatically curbed the bureau’s activity.

Under the guidance of the Department of Government Efficiency, the Trump administration tried to cut CFPB staff by 90%, which would have left the bureau with around 200 employees, down from 1,500. The layoffs have been blocked by courts, but employees generally believe that the reprieve is only temporary, according to the Associated Press.

Many employees now perform no work, and much of the agency’s regulatory and enforcement has been halted.

This year, the CFPB has dismissed multiple enforcement actions, including four cases in February, originally filed during the Biden administration. One of those was a $2 billion suit against Capital One over alleged deceptive interest practices.

Additionally, in June, another 18 lawsuits were dropped. According to Carter Dougherty, a spokesman for Americans for Financial Reform, the agency “had accused banks, mortgage firms and installment lenders of financial abuses and deception.”

Dougherty also said that as of Jan. 25, the CFPB had obtained over $21 billion in relief for consumers “in the form of restitution and canceled debts,” while the “Trump administration’s shortcomings have already cost consumers $18 billion.”

Now, the budget cuts implemented by the megabill will force the agency to lay off employees.

Dougherty told the Washington Examiner that the “agency will have to do with fewer people doing a tough job — if the Trump administration allows for them to do their work on behalf of American consumers.”

“The cut in CFPB funding will only add to the harms that the Trump administration has created by trying to dismantle this vital agency from within,” Dougherty said. “Already, consumers have suffered as the Trump-appointed leadership at CFPB abandons settlements with wrongdoers and drops enforcement cases involving Wall Street banks and predatory lenders.”

Senate Republicans have maintained that the budget cuts will not hinder the CFPB’s core functionality or its ability to request funds through the congressional appropriations process.

Supporters of the agency’s current funding structure, through the Federal Reserve, note that other financial regulators, such as the Office of the Comptroller of the Currency, also operate outside of congressional funding.

However, Bill Hulse, a senior vice president at the Center of Market Competitiveness for the Chamber of Commerce, said the CFPB differs from prudential regulators, such as the OCC.

He argued that the CFPB’s broad regulatory approach is a departure from what Warren envisioned in the 2007 proposal she wrote as a law professor. Her proposed model for the CFPB was intended to mirror the Consumer Product Safety Commission, a more targeted consumer protection agency, rather than an agency with expansive market-wide authority.

Hulse, whose organization has sued the agency three times since 2012, said the CFPB’s lack of accountability has enabled regulatory overreach.

The Chamber of Commerce “expressed deep concern, that not just the creation of an entirely new agency, but the way that it was structured with lack of accountability to really any other part of government,” Hulse said to the Washington Examiner.

Still, he said that the chamber’s view is not that the agency should be dismantled. Instead, it should have “more transparency, and accountability from the agency,” including “broad stakeholding input, including from the business community, so that our member companies can offer products and services that consumers demand with reasonable consumer protections,” Hulse said.

Berlau said he hopes the cuts to the CFPB will refocus the agency, give it “more accountability, and make it more focused on really protecting consumers, but otherwise letting entrepreneurs create benefit, and create beneficial innovations, and compete for consumers’ business.”

REPUBLICANS UNVEIL PLAN FOR ‘PORTABLE BENEFITS’ FOR GIG WORKERS

Sovern, though, said the cuts have already undermined the agency, saying the CFPB’s efforts have hit a “brick wall.”

“The number of complaints to the CFPB database this year has taken a huge jump, suggesting that wrongdoers are responding to the CFPB shutdown by doubling down,” Sovern said. “The CFPB was also created to keep another Great Recession from happening. We can only hope that cuts to the bureau don’t lead to another Great Recession.”