For years, US financial companies have fought against the Office of Financial Protection of the Consumer, the head of Finance Surveillance of the US consumer, in the courts and the media, portraying the agency as illegitimate and unfairly addressed to the actors of the industry.
Now, with the CFPB on life support after the Trump administration issued a stop order and closed its headquarters, the agency meets an unlikely ally: the same banks that complained reliably of their rules and compliance actions under former director Rohit Chopra.
This is because if the Trump administration manages to reduce the CFPB to a shell of their former self, the banks would be directly competing with non -bank financial players, from large technologies and Fintech companies to mortgage lenders, automotive and payment days, which enjoy federal scrutiny than federal federal insurance institutions.
“The CFPB is the only federal agency that supervises non -depository institutions, so it would disappear,” said David Silberman, a veteran bank lawyer who conferences at the Yale Law Faculty. “Payment applications such as Paypal, Stripe, Cash Applied, that kind of thing, would approach a free trip at the federal level.”
The turn could roll the clock back to an environment prior to 2008, where state officials were largely left to prevent consumers from being scammed by non -bank suppliers. The CFPB was created after the 2008 financial crisis that was caused by irresponsible loans.
But since then, digital players have made significant advances by offering banking services through mobile phone applications. Fintechs led by Paypal and Chime had approximately as many new accounts last year as all large and regional combined banks, according to Cornerstone Advisors data.
“If you are the great banks, you certainly do not want a world in which non -banking have much greater degrees of freedom and much less regulatory supervision than banks,” said Silberman.
Keep exams
The CFPB and its employees are in Limbo after the interim director Russell Vought took over last month, issuing a wave of directives then 1,700 employees of the agency. Working with agents of the Efficient Department of the Government of Elon Musk, Vought quickly dismissed about 200 workers, according to the reports, took measures to end the leasing of agency buildings and canceled resams of contracts required for legally mandatory tasks.
In internal emails published on Friday, CFPB operations director Adam Martinez detailed plans to eliminate approximately 800 supervision and execution workers.
The senior executives of the CFPB shared plans for more layoffs that the agency would leave with only five employees, CNBC reported. That would give a touch of the agency’s ability to carry out its supervision and application duties.
That seems to go beyond what even the consumer bankers association, a frequent CFPB critic, would like. The CBA, which represents the largest retail banks in the country, has sued the CFPB in the last year to spit the rules that limit late overflows and credit cards. More recently, said the role of CFPB in maintaining a leveling playing field among market participants.
“We believe that the new leadership includes the need for exams to continue the large banks, given intersections with prudential regulatory exams,” said Lindsey Johnson, president of the CBA, in a statement provided to CNBC. “It is important to note that the CFPB is the only examiner of non -bank financial institutions.”
Vought’s plans to limp the agency were arrested by a federal judge, who is now considering the merits of a lawsuit filed by a CFPB union requesting a preliminary judicial order.
An audience in which Martínez is scheduled to testify is scheduled for Monday.
‘Good luck’
Meanwhile, bank executives have gone from the CFPB antagonists to among the interested parties, will disappear.
In a banker convention in the late October in New York, the JPMorgan Chase CEO, Jamie Dimon, encouraged his teammates to “defend” against regulators. A few months before, the bank said it could sue the CFPB for its research on the Pares Zelle pairs network.
“We are demanding our regulators again and again because things are becoming unfair and unfair, and are harming companies, many of these rules are harming people with less payment,” Dimon said in the convention.
Now, there is a growing consensus that an initial impulse to “eliminate” CFPB is a mistake. In addition to increasing the threat of non -banking, the current rules of the CFPB would still be in the books, but no one would be close to update them as the industry evolves.
Small banks and credit cooperatives would be even more disadvantaged than their biggest peers if the CFPB disappeared, the industry defenders say, since they were never regulated by the agency and would face the same regulatory scrutiny as before.
“Conventional wisdom is not correct that banks only want the CFPB to leave, or that the banks want consolidation of the regulator,” said an executive of an important American bank that refused to be identified talking about the Trump administration. “They want reflexive policies that support economic growth and maintain security and solidity.”
A CFPB senior lawyer who lost his position in recent weeks said the industry alignment with Republicans may have been failed.
“They are about to live in a world in which the entire non -bank financial services industry is not regulated every day, while the Federal Reserve, Fdic and the OCC supervises them,” said the lawyer. “It is a world where Apple, Paypal, Cash App and X extend for four years. Good luck.”
