What’s Going On with the CFPB?

Back in our very first newsletter last August, we highlighted the growing attention on so-called “junk fees” – surprise charges buried in everything from bank overdrafts to credit card late payments. We applauded the work of the Consumer Financial Protection Bureau (CFPB), the federal agency behind those efforts. At the time, we said: they’ve got your back.

Less than a year later, the situation looks different. So, what changed?

Let’s take a step back.

What Is the CFPB and What was the Funding Fuss About?

The CFPB was created after the 2008 financial crisis to protect consumers from shady financial practices – think: hidden fees, tricky loans, deceptive credit card terms. And it has done that. It’s returned billions of dollars to consumers and gone after companies for bad behavior.

But some in the financial industry- and their political allies – have never liked it. Why? Not because they think consumers don’t deserve protection, but because:

1. It has a lot of power: One person runs it (the Director), not a commission with both parties. So critics worry it’s too powerful and not politically balanced.
2. Congress doesn’t control its purse strings: Most federal agencies get their funding through Congress every year. The CFPB doesn’t – it gets its funding directly from the Federal Reserve, which means it’s insulated from political pressure. Supporters say that’s good, because it keeps the agency independent. Critics say it’s dangerous, because Congress can’t rein it in by cutting its budget.

That funding setup is what led to a Supreme Court case in 2023. Opponents argued that because Congress doesn’t directly approve its budget, the CFPB’s funding violates the Constitution’s rules about how federal money should be spent.

The Supreme Court disagreed.

So was there wrongdoing?

No,not in the sense of financial scandal or corruption. The controversy was never about the CFPB stealing money or doing something illegal. It was a constitutional debate about how it’s funded – not what it’s doing.

That said, critics of the CFPB often oppose its actions too, like cracking down on payday lenders or forcing banks to refund overdraft fees, because those rules can hurt profits in some parts of the financial sector. So while the mission isn’t usually attacked outright, there’s a lot of political resistance to the agency’s reach.

So… Are They Actually Helping?

That depends on who you ask.

Since its launch, the CFPB has returned more than $21 billion to consumers by going after credit card companies, mortgage lenders, and student loan servicers that broke the rules. That’s real money back in people’s pockets – from illegal fees, deceptive terms, and outright scams.

But critics argue the CFPB sometimes swings too hard. They say some of its rules (especially those aimed at protecting vulnerable borrowers) have made it harder for low-income people to access credit at all. In other words: too much protection can backfire.

Supporters push back hard on that. They argue that clear terms and fair lending aren’t barriers, they’re the foundation of trust. And without oversight, the financial world tends to drift back into murky territory: triple-digit payday loan rates, surprise overdraft fees, and fine print traps that most people don’t catch until it’s too late.

What Now?

As of Friday afternoon the dismantling of the Consumer Financial Protection Bureau has moved from quiet attrition to active closure.

According to Bloomberg Law, CFPB staff received an email from the agency’s facilities unit on May 22 instructing them to sign up for times to collect their personal belongings from the Washington headquarters at 1700 G Street NW. The directive offered four designated pickup days in June – June 3, 4, 5, and 11 – after which any uncollected items would initially be treated as “abandoned property.”

The order comes months after Acting Director Russell Vought locked most staff out of the building and removed the agency’s name from the premises. While a federal court temporarily blocked the mass termination of nearly 1,500 employees earlier this year, the email suggests Vought is confident that a pending appeal will overturn that decision. A D.C. Circuit panel heard arguments on May 16, and a ruling is still pending.

In the meantime, employees have either left voluntarily, found new jobs, or been left in limbo. Only a handful have been allowed to continue working on limited rulemaking or administrative tasks. Meanwhile, the CFPB has attempted to break its lease on the building, owned by the Office of the Comptroller of the Currency, and the OCC is reportedly in talks with other agencies about taking it over.

This is no longer just a pause in operations. It’s the architecture of a shutdown.

The agency’s prior rollback of guidance documents, proposed rules, and enforcement actions is now part of a broader effort to erase its footprint altogether. While the CFPB technically still exists, its staff is being asked to box up desks, identify whether they have federal records in their workspace, and prepare to vacate. The stated focus on provable fraud affecting veterans and servicemembers remains, but with nearly no staff or infrastructure behind it, that mission is more symbolic than operational.

In short, the only federal agency specifically created to protect financial consumers is on the verge of collapse – not by legislation, but by attrition and administrative power.

For consumers, the consequences won’t be announced in headlines. They’ll show up in fine print through quietly rising fees, murky disclosures, and fewer avenues for recourse when things go wrong.