Millions of Americans are more likely to be ripped off by scammers and thieves as a result of a bid by the Trump administration to defang the top US consumer watchdog, former officials have warned.
Donald Trump has indicated he wants to eliminate the Consumer Financial Protection Bureau (CFPB), which was set up after the financial crisis to shore up oversight of consumer financial firms, prompting critics to accuse him of setting the stage for “one of the biggest cons” in modern memory.
The billionaire tycoon Elon Musk, engaged in a government-wide “efficiency” blitz with the president’s blessing, has suggested the agency is already dead. Only in a court filing late on Monday did Russell Vought, the CFPB’s acting director, clarify it would continue to exist – albeit in a “more streamlined and efficient” form – under the new administration.
With the CFPB incapacitated by layoffs, work stoppages and widespread confusion over its future, the Massachusetts senator Elizabeth Warren, who played a key role in setting up the agency, held a forum on its future on Capitol Hill on Tuesday alongside other Senate Democrats.
Lorelei Salas, who resigned as the CFPB’s director of supervision earlier this month, came with a stark message for consumers: the agency is “no longer able” to defend them. The threat of another financial crisis has risen, she cautioned.
“You, your family and the economy itself has become less safe, secure and stable,” said Salas. “Your parents are more likely to see their retirement threatened by scammers and fraudsters. Your kids are more likely to be ripped off, or given the runaround by their student loan company.
“Your sick spouse is more likely to be harassed by a debt collector for a medical bill they do not even owe. Your nephew who’s getting ready to be deployed overseas is more likely to be targeted by a predatory lender that sees them as just another dollar sign in a uniform.
“These are hard things to hear, but it is the truth. Millions of Americans are more likely to get ripped off because the CFPB was essentially fired from doing the job Congress gave it.”
The White House and the CFPB were approached for comment.
The CFPB has returned more than $21bn to consumers since 2011. But the agency attracted critics on the right, who accused it of overreach. “We’re trying to get rid of waste, fraud and abuse,” Trump told reporters earlier this month.
The way Trump officials are treating the CFPB “could be one of biggest cons in recent history”, claimed Warren, who described it as “the theft of billions of dollars from American consumers”.
The agency is processing thousands fewer complaints each day since Trump took office, according to analysis released by Democrats on the Senate banking committee.
“Elon Musk and Donald Trump are going all out to kill the Consumer Financial Protection Bureau and make it easier to cheat people out of their hard-earned money,” said Warren. “President Trump ran on lowering costs for families on ‘Day One’ – those were his words.
“But instead of trying to lower costs, he and his co-president Elon Musk are putting an end to the millions of dollars this little agency delivers every single day for working people. For everyone who gets scammed or cheated because the CFPB cops have been taken off the beat, costs have gone up – not down.”
In interviews with the Guardian, former insiders questioned why Musk’s so-called “department of government efficiency” (Doge) had targeted the agency. “I think it’s basically a waste of taxpayer money, to throw out what’s been built all these years,” said Peggy Twohig, a veteran federal official who helped establish the CFPB.
Recent layoffs “will have serious consequences on the bureau’s ability to do its work”, David Silberman, a former associate director of the CFPB, said. “If they want to keep the CFPB functioning, it’s going to be a whole lot harder without the people and the contractors they’ve let go.”
Twohig, who worked for decades in government and was assistant director for supervision policy at the CFPB until 2021, said she struggled to understand how an agency created to stand up for individual consumers had become such a target for conservative figures.
“It’s protection for the little guy against the big overreaches,” she said. “I believe in the fair market system, and competitive practices, but often in the race for profits there is a push or overreach.”
In the early 2010s, Congress decided “there is a role for a regulator whose mission is to focus on consumer protection and to prevent markets from running amok”, said Silberman. “I personally share that view.”
But “reasonable people” can debate the merits and pitfalls of its actions over the years, added Twohig, who noted that different administrations can shift the CFPB into new directions.
“That’s very different to completely shutting down the agency, which I would argue is a complete waste to all this effort over the past years to create this agency which has brought a very good change to the regulatory landscape to help protect consumers.”
