We’ve discussed the Consumer Financial Protection Bureau numerous times in this space, referring to it as a good idea that’s been taken too far. The brainchild of now-Senator Elizabeth Warren, it was created by Congress in the aftermath of the Great Recession. It was saved by Justice Clarence Thomas, who authored an opinion upholding the constitutionality of its funding mechanism earlier this year. It’s continuing to expand its reach even in the waning days of the current administration. That’s why I wrote last month that everything will change on January 20, 2025.
That may have been an understatement. Just read Project 2025 and listen to Elon Musk.
You’ve certainly heard about Project 2025, the Heritage Foundation’s blueprint for the next conservative administration. The former and future president distanced himself from it during the campaign, but many of the advisors and appointees he’s selected played a role in creating Project 2025.
Let’s take a look at what it says about the CFPB:
It begins with a negative characterization: “. . . [T]he agency has been assailed by critics as a shakedown mechanism to provide unaccountable funding to leftist nonprofits politically aligned with those who spearheaded its creation.”
Followed by an explanation of its creation: “Passage of Title X of Dodd–Frank was a bid to placate concern over a series of regulatory failures identified in the wake of the 2008 financial crisis. The law imported a new superstructure of federal regulation over consumer finance . . . Consumer protection responsibilities previously handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, and Federal Trade Commission were transferred to and consolidated in the CFPB, which issues rules, orders, and guidance to implement federal consumer financial law. The CFPB collects fines from the private sector that are put into the Civil Penalty Fund.”
And some more negativity: “How the Civil Penalty Fund is spent is at the discretion of the CFPB Director . . . As noted, critics have charged that money from the Civil Penalty Fund has ended up in the pockets of leftist activist organizations.”
The text was written before the Supreme Court issued its opinion, and clearly the Heritage Foundation was betting on the CFPB having no funding mechanism as a result. Many believed that until the justices hinted otherwise at oral argument. However, given its expectations from the Court, Project 2025’s written prognosis for the CFPB was as follows: “Provided the Supreme Court affirms the Fifth Circuit holding in Community Financial Services Association of America, the next conservative President should order the immediate dissolution of the agency—pull down its prior rules, regulations and guidance, return its staff to their prior agencies and its building to the General Services Administration.”
So closing down the CFPB was a goal of Project 2025. And now, Elon Musk, the billionaire incoming co-director of the Department of Government Efficiency (DOGE), has tweeted that he wants to “[d]elete the CFPB.” Never mind the worthy goals of Dodd-Frank and the reasonable protections it has put in place. Never mind the president can replace its director with someone aligned with his goals. Never mind the fact that its budget for fiscal year 2024 is $785 million, while total federal expenditures are $6.752 trillion. The CFPB represents .0897% of the federal budget—not even a tenth of one percent.
And never mind being saved by Justice Thomas. If Musk can convince Congress to dissolve it, the CFPB will be history.
Contact the attorneys at Dalton & Tomich to discuss regulatory compliance for your institution.
