Why Is the Consumer Financial Protection Bureau in Trouble?

The liberty principle for this freedom Friday concerns consumer protection for American citizens. However, some methods of protection are better than others.

The Department of Government Efficiency – better known as DOGE – has the Consumer Financial Protection Bureau (CFPB) in its sights. DOGE is looking at the “initiative for its censorship, waste, and hindering of businesses disfavored by the Left, among other issues.”

According to an article by Fred Lucas in The Daily Signal, Democrats, the media, federal employee unions, “60 Minutes,” and Sen. Elizabeth Warren (D-Mass.) are all objecting to the dismantling of the CFPB. Lucas claims that Warren, as a law professor at Harvard, “was the architect of the agency.” 

The CFPB was established by the 2010 Dodd-Frank financial reform legislation to regulate banks, credit card companies, lenders, and other financial services companies. It is funded through the Federal Reserve.

The agency has had a string of controversies, including censorship, a massive data breach, internal financial waste, and complaints of workplace discrimination.

Several actions are being taken regarding the CFPB. President Donald Trump appointed Russ Vought, Director of the Office of Management and Budget, to be the acting director of the CFPB, which operates under the Federal Reserve. “Vought eliminated the agency’s budget request for the next quarter and ordered about 1,700 employees not to perform any work.

Meanwhile, Rep. Byron Donalds (R-Fla.) introduced a bill to eliminate the entire agency. A spokesperson for CFPB had no response when asked for a statement for this story. Here are five controversies that Lucas considers to be the biggest ones in which the agency has been involved.

1. Censorship in Chicago

The CFPB scored a $105,000 settlement late last year with the Chicago-based Townstone Financial, a non-bank mortgage firm, in a case that critics say amounted to policing speech.

“This was German-like censorship by the CFPB,” Berlau said. “No financial services owner is free to speak on a podcast or radio show under this very dangerous precedent.”

Berlau said the Trump administration should cancel the settlement and fire anyone involved….

2. Discriminating Tastes

Last year, the CFPB settled a decade-old class action racial discrimination lawsuit for $6 million brought by 85 black and Hispanic employees. The agency also paid $1.5 million for attorneys fees….

3. Data Breach of 256,000 Consumers’ Information

CFPB defenders assert it protects consumers when accessing records from financial institutions.

But the CFPB hasn’t yet resolved a 2023 data breach that forwarded the confidential information of 256,000 consumers to a personal email address, Berlau noted….

4. Surpassing the Trump Tower

A Federal Reserve inspector general report released in 2014 found renovations for the CFPB’s Washington headquarters exceeded $215 million – or about $120 million over the original estimate.

The House Financial Services Committee noted this was more than $590 per square foot. That meant the agency was spending more per square foot than it cost to build the Trump World Towe in New York, which was $334 per square foot; the Bellagio Hotel and Casino in Las Vegas, which was $330 per square foot; and the Burj Khalifa in Dubai, which was $450 per square foot.

The inspector general report also said the CFPB “was unable to locate any documentation of the decision to fully renovate the building.” …

5. Operation Choke Point

The CFPB was involved in the Obama administration’s Operation Choke Point debanking initiative, according to a 2015 report by the inspector general of the Federal Deposit Insurance Corporation.

The operation spearheaded by the Justice Department encouraged banks not to do business with gun stores, pawn shops, payday lenders, and other legal industries considered “high risk.” The CFPB reportedly warned banks against disclosing publicly about any of its investigations.