EP 23: How Corporate Power Destroyed the CFPB

In this episode, I trace how corporate power and political influence destroyed the Consumer Financial Protection Bureau, silencing the only federal agency whose sole mission was protecting ordinary consumers. From real-world cases to court rulings and donor pressure, this is the story of what happens when the watchdog is taken off the beat. 

Check out my substack page where I tackle some of the episode topics in depth and write about other issues our country and the world are facing today. https://substack.com/@ktdpodcast

Transcript

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Christmas came early. The regulators finally work for us. That was a bank executive earlier this year at a conference saying the quiet part out loud. It happened soon after the Trump administration gutted the Consumer Financial Protection Bureau. Not in a leaked email, not in a private conversation. At a public event to a room full of his peers. Celebrating the fact that the cops were taken off the beat. That quote, those nine words perfectly encapsulate today's America. It reveals exactly whose interest this administration serves, and how little any of them think to hide it anymore. Donald Trump promised to drain the swamp. Instead, the swamp has completely taken over. Welcome back to Khannecting Dots. It's been a while since I've returned to the DOGE series. The last episode focused on U-S-A-I-D, how a conspiracy theory drove the administration to dismantle America's humanitarian aid agency, shutting programs worldwide, and cutting off food medicine and disaster relief. I promised I'd return to the Consumer Financial Protection Bureau, or CFPB, and the Department of Education. Today I'm gonna focus in on the CFPB. Why now? Two reasons. First, in November, Elon Musk secured what could become a trillion dollar compensation package from Tesla. I'll break that down more fully in a related substack piece. But for now, understand this. The man who helped dismantle Federal oversight is positioned to personally profit on a scale that makes the CFPB's entire 14 year budget look like a rounding error. Second, the CFPB is set to run out of money and close its doors in early 2026. Now you've probably heard the acronym in the headlines. Earlier this year, the administration locked the CFPB headquarters, fired its director and ordered staff to stop working. Doge announced its destruction early and loudly. But Doge went after so many agencies, each with its own acronym and mandate that they start to blur together. Another agency gutted. Another acronym, eliminated. Another so-called Efficiency Win. So why focus on this one? Because the CFPB's Destruction reveals something essential about who this administration actually serves. This wasn't about waste or efficiency. It's about removing the only federal agency whose sole mission was protecting ordinary Americans from corporate fraud. Before we dive into what the CFPB was, let's talk about some of the people it actually helped. Anthony Ramirez, a truck driver in California. In August, 2021, he overdrew his checking account at Bank of America. The bank charged him$245 in overdraft fees. The problem was this; Bank of America was still advertising a client assistance program that promised to refund overdraft fees during the pandemic. Anthony was directed to request a refund through that very program. But the program had been shut down a year earlier. The bank never updated the app or its website. Never told customers, the relief no longer existed. Anthony filed a complaint with the CFPB. In 2023. The agency ordered Bank of America to pay more than$100 million in refunds from misleading customers like him. Then there's a New York business owner whose bank froze his checking account. He couldn't pay rent, utilities or buy groceries. He couldn't even put gas in his car. He contacted his congressional representative. They referred him to the CFPB. The agency intervened. He got his money back. When the CFPB investigated complaints, it often uncovered systemic abuse. At Navy Federal Credit Union, it found the bank was charging overdraft fees to service members and veterans, even when their accounts showed positive balances. Active duty troops trying to pay basic bills were hit with fees they didn't owe. The CFPB ordered Navy Federal to return$80 million to its customers. These weren't isolated cases. Over its lifetime. The CFPB saves consumers over$21 billion. For every dollar taxpayers invested, consumers got at least$2 back. So why destroy something that works this well? To answer that, we need to understand why the CFPB was created in the first place. It was created after the 2008 financial collapse. Millions of Americans lost their homes to mortgages they'd been deceived into taking. Banks sold loans they knew people couldn't repay, then bundled and sold them as investments. The problem wasn't just fraud, it was fragmentation. Consumer finance laws were enforced by a patchwork of agencies, each with different priorities. The result was predictable. Protecting consumers was never anyone's primary job. Minimal oversight, emboldened banks and lenders to push predatory financial products at massive scale. Elizabeth Warren, then a Harvard law professor studying bankruptcy and consumer debt proposed a fix. One agency, one mission. Protect ordinary Americans from financial deception. She put it this way,"you can't buy a toaster that has a one in five chance of burning down your house, but you can refinance a home with a mortgage that is the same one in five chance of putting your family on the street." In 2010, Congress created the Consumer Financial Protection Bureau; independent. Fed, funded, and designed to be harder to politically manipulate. For consumers. It became the country's most important financial watchdog. For banks and corporations. It became an obstacle. Here's some more examples of what the CFPB actually accomplished. In 2022, it hit Wells Fargo with a$3.7 billion penalty. The bank had been opening accounts customers never authorized charging fees on those fake accounts and botching mortgage applications so badly that families who qualified for loans were pushed into foreclosure. It went after other major institutions too, like Bank of America and Navy Federal Credit Union, I mentioned earlier. But the CFPB didn't just punish misconduct, it prevented it. It capped credit card late fees, cutting them from$32 to$8. A change that would've saved consumers more than$10 billion a year. It limited overdraft fees. It removed medical debt from credit reports, and it built a public complaints database so consumers could compare products and hold companies accountable. That complaint system became one of the agency's most powerful tools. When consumers filed complaints, companies were forced to respond, on the record, and on a deadline. The CFPB tracked those responses, identified patterns of abuse and escalated cases where people were at immediate risk, like foreclosures or unlawful account freezes. The scale of those complaints tells you how badly this oversight was needed. In 2019, the CFPB received about 280,000 complaints. By last year, that number had surged more than 2.7 million. More than 2.3 million involved credit reporting errors that damaged people's scores and affected lives in numerous ways. More than half of those complaints resulted in relief. As Adam Rust of the Consumer Federation of America put it."These credit score formulas govern so many factors of your life. It's not just your ability to get a loan, it's your ability to secure housing or qualify for a job. It's important that you can resolve something, but it's difficult to do it on your own." Much of the relief was non-monetary. Fixing credit reports, stopping harassment by debt collectors, correcting account records. Still more than$300 million was returned to consumers through the complaint system alone, including$90 million just last year. No other government or private entity has the capacity to handle consumer financial harm at this scale, and yet from the moment it opened its doors, Republicans worked to destroy it. Republicans have opposed the CFPB since its creation. They've called it government overreach, accused of harassing businesses, and attacked its independence. But a recent ProPublica investigation uncovered something else. Many of the same Republican lawmakers who voted to gut the CFPB, were quietly using it to help their own constituents. Senator John Cornin of Texas alone referred more than 800 constituent complaints to the CFPB. More than any other current lawmaker from either party. Other Republicans did the same. Representative Daryl Isa referred more than 100 complaints. So did representative Rob Whitman. In total Republican congressional offices steered nearly 10,000 complaints to the CFPB between 2011 and 2025. Here's how that played out. A service member from New Jersey had their savings stolen. They contacted the Republican representative for help. That office referred the case to the CFPB. The agency intervened. The service member got relief. Then that same lawmaker voted to slash the CFBs budget by 46%. This wasn't an isolated case. Take the New York business owner I talked about earlier. After his bank account was frozen, he contacted his Republican representative who referred the case to the CFPB. Two weeks later, that lawmaker voted to gut the agency. In July, 2025, nearly every Republican in Congress voted for Trump's signature legislative package, the one big beautiful bill act. It cut the CFPB's budget cap from$823 million to$446 million per year, a 46% reduction. The same lawmakers who used the CFPB to serve their constituents, voted to dismantle it. By now, it's clear why corporations hated the CFPB. It held them accountable. It cost them money, and it forced them to follow the rules. DOGE, led by Elon Musk became their hatchet man. But Musk wasn't doing this work for others. He had a lot to gain from the CFPBs destruction. The agency had received hundreds of complaints about Tesla's financing arm. Complaints involving auto loans and debt collection. Those investigations were frozen when DOGE took over. At the same time, Musk was preparing to launch X Money, a payment platform integrated into his social media company, X. If successful, it would compete directly with Venmo, cash app, and PayPal. All companies regulated by the CFPB. In February, doge operatives swept into the CFPB headquarters. According to multiple sources, including a CBS news investigation, they set up camp in the building's basement. They taped paper over the window so no one could see what they were doing. And they were granted unprecedented access to the CFP B'S confidential database. The same databases that contain consumer complaints against companies like Venmo and Cash App, Musk's future competitors, along with proprietary business information, trade secrets and sensitive financial data. Normal CFPB employees undergo months of background checks to access those systems. Fingerprinting, interviews, extensive vetting. The DOGE team received a brief privacy training and signed non-disclosure agreements. No background checks, no months long review. Hannah Hickman. a CFPB attorney fired shortly after the takeover put it bluntly."I guess it's easier to fire us than it is to beat us in court." Musk wasn't the only major Trump donor with a stake in gutting The CFPB. Paul Singer who runs the hedge fund, Elliot Management, contributed$7.5 million to Trump's reelection efforts. He's invested in financial companies that accumulated more than 5,000 complaints in the CFBs database. Mark Andreessen and Ben Horowitz gave a combined$7 million to pro-Trump Super pacs. Their firm invested in LendUp, a payday lender who the CFPB fined tens of millions of dollars for predatory practices. Warren Stevens contributed$3 million to Trump's campaign. He held a major stake in integrity, advance another payday lender the CFPB sued and fined for predatory lending. The pattern is unmistakable. Trump's biggest donors included people who ran or invested in companies being investigated, fined, or sued by the CFPB. They paid to dismantle the agency that was holding them accountable. And now they're collecting their returns. Within weeks of Trump's inauguration, the CFPB was on the chopping block. By February 7th, those operators were already inside CFPB headquarters, shutting the place down and sending staff home. Three hours later, Elon Musk posted on X, CFPB RIP, alongside an image of a gravestone. Three days after that, Russell Vought, Trump's budget director and a key architect at Project 2025, was installed as the CFPB's acting director. His first message to staff was simple."Do not perform any work tasks". The agency's website went dark. Social media accounts were deleted. Investigations frozen. Enforcement actions halted. Consumer complaints piled up with no one left to respond. In late March, federal Judge Amy Berman Jackson stepped in. She issued a temporary injunction blocking the dismantling. Ordered, terminated employees reinstated, and prohibited further firings or data deletion. In her order, she warned there was a substantial risk. The administration would complete the agency's destruction before the courts could rule, and that it would be impossible to rebuild. Administration appealed. In August a three judge panel on the DC circuit lifted Jackson's injunction. Two Trump appointees ruled that a directive to close the agency wasn't something courts could review. The lone dissenting judge warned that the idea"courts are powerless to stop a president from abolishing federal agencies cannot be reconciled with a constitutional separation of powers or our nation's commitment to government of laws". By late November, the CFPB announced they would transfer all active litigation to the Justice Department. Enforcement actions, appeals, regulatory challenges. Kat Farman, president of the Union representing CFPB attorneys warned staff feared the DOJ would quietly dismiss the cases. Then came the final maneuver. The Justice Department's Office of Legal Counsel issued a memo claiming a CFPB's funding mechanism was illegal. The theory was simple and deeply flawed. The CFPB draws funding from the Federal Reserve's combined Earnings. The Fed has operated at loss since 2022. No earnings. The memo argued meant no funding and therefore no CFPB. Several federal judges had already rejected that theory outright. Even Ken Paxton, Republican Attorney General of Texas disputed it. But it didn't matter, in a court filing the CFPB warned it had enough funding to operate through the end of 2025. After that, it expects to run out of money In early 2026. The agency will close and there is no one coming to save it. So what does all of this mean for ordinary Americans? Right now there are nearly 500,000 unresolved consumer complaints sitting in the CFPB's database. Half a million people who filed complaints about banks, credit cards, debt collectors, mortgage servicers, and got no help. Among those complaints, 75 families facing imminent foreclosure. People about to lose their homes. Under normal circumstances, the CFPB would escalate those cases immediately. Contact mortgage servicers, intervene. That didn't happen. Those families got nothing. And then there are the cases that were simply erased. Take Toyota Motor Credit. Between 2016 and 2021 Toyota dealers lied to customers about whether add-on insurance and servicing products were mandatory. They sneak them into contracts without customers knowing. People tried to cancel. Toyota trained its representatives to keep selling until the customer asked three times. Even then, customers couldn't cancel during the call. They had to submit a written request. The CFPB ordered Toyota to refund$48 million to 118,000 consumers and pay a$12 million fine. The Trump administration reversed it. Toyota kept the money. Remember the Navy Federal Credit Union, the$80 million refund to service members and veterans that I mentioned earlier. Also reversed. In total 22 CFPB enforcement actions have been permanently dismissed. At least$120 million that should have gone back to consumers stayed in corporate pockets. Another$240 million is now at risk. And this isn't just about past cases being wiped away, it's about what's coming next. Auto loan delinquencies hit 11% in January, 2025. That's the highest level on record, going back to at least 2005. Higher than during the 2008 financial crisis. Medical debt is back on credit reports after a federal court overturned the CFPB rule that removed it. That means people who were sick, who went to the hospital and couldn't afford the bills, now have that debt dragging down their credit scores. Payday lenders are returning to triple digit interest rates. Credit card companies are reintroducing junk fees, costing the average household about$420 a year. Mortgage servicers are misreporting payments again. These aren't just numbers, they're individual stories. Like a woman in Georgia undergoing chemotherapy. She disputed a charge with a merchant. Her credit company denied the refund. Before the CFPB was gutted, she could have filed a complaint. The agency would've intervened. Now. There's no one to call. No refund checks going out. No investigations happening. No enforcement actions being filed. The watchdog is gone and corporations know it. And so here we are. The Consumer Financial Production Bureau, an agency that saved billions of dollars for Americans cheated by corporations, protected millions from fraud, and actually worked; dismantled by an administration that claimed it would fight for ordinary citizens. But this wasn't about efficiency. It was never about waste. This was about corporate capture. Not the slow kind where lobbyists quietly weakened enforcement over years. But immediate and total. Billionaires who funded Trump's campaign had direct stakes in destroying the CFPB. Their companies were under investigation. Their business models depended on the very practices the agency was designed to stop. So they paid to dismantle it and they succeeded. The same pattern played out across the government. DOGE targeted agencies that held corporations accountable, agencies that regulated finance, protected workers, enforced environmental laws, and maintained safety standards. The same Republicans who quietly use the CFPB to help their own constituents voted to gut it because their loyalty isn't to the people who elected them. Remember what the bank executive said after the CFPB was gutted,'the regulators finally worked for us'. That's the truth of this administration. Government doesn't serve the public anymore. It serves the oligarchs who bought it, the billionaires who funded the campaigns. The corporations whose profits depend on removing oversight. The CFPBs destruction makes one thing unmistakably clear. This is who policy serves now, and this is what happens when concentrated wealth translates directly into political power. Thank you for listening. If this episode helped you understand what we're losing with the destruction of the CFPB, please consider subscribing, sharing it with a friend, and leaving a review. Until next time, stay curious, stay critical, and stay connected.