On Friday morning, a district court gave the Trump administration another win, reversing an injunction a judge had brought that had blocked the Trump administration’s attempt to dissolve the Consumer Financial Protection Bureau.
On February 1, President Trump removed CFPB director Rohit Chopra, who had ben appointed by the Biden administration. Acting director Russell Vought then ordered CFPB staff to halt all work and shut down its headquarters. That triggered a lawsuit from the National Treasury Employees Union — which represents most CFPB employees —along with other plaintiffs.
In late March, Judge Amy Berman Jackson in the U.S. District Court for the District of Columbia issued a <a href="https://news.bloomberglaw.com/banking-law/trumps-plan-to-slash-cfpb-workforce-erase-data-halted-by-judge" data-terminal-id="STUT89T0G1KX">preliminary injunction</a> blocking the moves by the Trump administration.
“After briefly <a href="https://news.bloomberglaw.com/banking-law/appeals-court-narrows-order-halting-trumps-cfpb-shutdown-moves" data-terminal-id="SUKZU6T0AFB4">narrowing</a> the scope of Jackson’s injunction, the DC Circuit panel <a href="https://news.bloomberglaw.com/banking-law/cfpb-mass-layoffs-paused-again-as-emails-show-rush-to-fire-staff" data-terminal-id="SVGB7IT0G1KW">reinstated</a> the order shortly after the CFPB attempted a drastic reduction-in-force plan meant to slash the majority of the agency’s headcount,” Bloomberg News reported. “Lawyers for the Trump administration argued Jackson’s injunction was an overly broad encroachment on a federal agency’s efforts to downsize in accordance with the president’s policy directives.”
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But on Friday, the United States Court of Appeals for the District of Columbia Circuit <a href="https://storage.courtlistener.com/recap/gov.uscourts.cadc.41898/gov.uscourts.cadc.41898.1208766660.0.pdf">ruled</a> that Jackson’s preliminary injunction be vacated.
The Consumer Financial Protection Bureau, which is funded by the Federal Reserve, was authorized in 2010 by the Dodd-Frank Act. It has been exempt from congressional oversight throughout its existence and its funding is not determined by congressional legislators, making it the only federal agency with that standing.
In 2015, Investor’s Business Daily accused the CFPB of “diverting potentially millions of dollars in settlement payments for alleged victims of lending bias to a slush fund for poverty groups tied to the Democratic Party” and planning to “create a so-called Civil Penalty Fund for its own shakedown operations targeting financial institutions,” the Heritage Foundation has noted.
In October 2022, the U.S. Court of Appeals for the Fifth Circuit stated that the CFPB’s “perpetual insulation from Congress’ appropriations power, including the express exemption from congressional review of its funding, renders the Bureau ‘no longer dependent, and as a result, no longer accountable’ to the Congress and ultimately, to the people.”

Donald Trump

Another Trump Win: Court Rules President Can Indeed Dismantle Consumer Financial Protection Bureau

Consumer Financial Protection Bureau

Courts

Dodd-Frank

Trump Administration

U.S.

Russell Vought gutted the Consumer Financial Protection Bureau (CFPB) on Saturday, one day after President Donald Trump tapped him to serve as the agency’s acting director.
The Senate confirmed Vought to serve as the next head of the Office of Management and Budget on Thursday night before he was tapped to also lead CFPB on Friday. One of Vought’s first acts at the CFPB was to issue a broad freeze of operations, including on new rules, guidance, investigations, and stakeholder communication.
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News: In Saturday night email obtained by RealClearPolitics, acting CFPB Director Russ Vought directs Consumer Financial Protection Bureau staff to issue no new rules, suspend effective dates of all final rules, and cease any new investigations: <a href="https://t.co/TIeSjr0mMq">pic.twitter.com/TIeSjr0mMq</a>
&mdash; Philip Melanchthon Wegmann (@PhilipWegmann) <a href="https://twitter.com/PhilipWegmann/status/1888409309937070128?ref_src=twsrc%5Etfw">February 9, 2025</a></blockquote>
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The Department of Government Efficiency, a team led by Elon Musk aimed at cutting government excess and honing operations toward Trump’s agenda, has targeted CFPB. Musk <a href="https://x.com/elonmusk/status/1887979940269666769">posted</a> to X on Friday the message “CFPB RIP” with an emoji of a tombstone.
In addition to freezing its operations, Vought also cut off funding for the agency. The CFPB operates in a unique position relative to most of the government. Created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB is funded directly from the Federal Reserve outside of the normal Congressional appropriations process.
“Pursuant to the Consumer Financial Protection Act, I have notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not ‘reasonably necessary’ to carry out its duties,” Vought posted to X on Saturday night. “The Bureau&#8217;s current balance of $711.6 billion is in fact excessive in the current fiscal environment. This spigot, long contributing to CFPB&#8217;s unaccountability, is now being turned off.”
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Pursuant to the Consumer Financial Protection Act, I have notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not &quot;reasonably necessary&quot; to carry out its duties. The Bureau&#39;s current balance of $711.6 billion is in fact…
&mdash; Russ Vought (@russvought) <a href="https://twitter.com/russvought/status/1888418946455589013?ref_src=twsrc%5Etfw">February 9, 2025</a></blockquote>
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Vought’s request was made official in a letter to Federal Reserve chairman Jerome Powell requesting $0 in funding for the CFPB in the third quarter of fiscal year 2025.
“I have determined that no additional funds are necessary to carry out the authorities of the Bureau for Fiscal Year 2025. The Bureau’s current funds are more than sufficient–and are, in fact, excessive–to carry out its authorities in a manner that is consistent with the public interest,” Vought wrote.
“In the past, the Bureau has at times opted to maintain a ‘reserve fund’ for financial contingencies. But no such fund is required by statute or necessary to fulfill the Bureau’s mandate,” he continued. “The Bureau’s new leadership will run a substantially more streamlined and efficient bureau, cut this excessive fund, and do its part to reduce the federal deficit.”
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News: In letter to FED Chairman obtained by RealClearPolitics, Trump’s acting CFPB director <a href="https://twitter.com/russvought?ref_src=twsrc%5Etfw">@RussVought</a> requests for Q3 of FY25 a grand total of… $0. <a href="https://t.co/OeCoGmenJs">pic.twitter.com/OeCoGmenJs</a>
&mdash; Philip Melanchthon Wegmann (@PhilipWegmann) <a href="https://twitter.com/PhilipWegmann/status/1888418397311959198?ref_src=twsrc%5Etfw">February 9, 2025</a></blockquote>
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Russell Vought

CFPB Gutted In Latest Trump Admin Move To Cut Government Waste

Federal Reserve

Washington D.C.

Leftist Massachusetts Democrat Sen. Elizabeth Warren, in a desperate attempt to protect the Consumer Financial Protection Bureau – an entity she created that, unlike other federal regulatory bodies and enforcement agencies, determines for itself how much money it needs and obtains it directly from the Federal Reserve, as the Heritage Foundation has <a href="https://www.heritage.org/courts/report/money-nothing-thats-not-the-way-you-do-it-the-consumer-financial-protection-bureau">noted</a>, actually <a href="https://grabien.com/file/getmedia?id=2788522&amp;key=8c4de1fc2c5ba3aa88f5040b362a9044&amp;userid=9685">praised</a> President Donald Trump.
In late January, U.S. Sen. Ted Cruz (R-TX) introduced the Defund the CFPB Act, which would zero out the transfer payments from the Federal Reserve to the Consumer Financial Protection Bureau.
“The CFPB is an unelected, unaccountable bureaucratic agency that has imposed burdensome and harmful regulations on American businesses, banks, and credit unions,” Cruz stated. “It is an unchecked Obama-era executive arm and the Federal Reserve should not be transferring funds to it. Enacting this legislation would save American taxpayers billions of dollars and I call on the Senate to expeditiously take it up and pass it.” 
“Under Joe Biden–appointed Rohit Chopra, businesses and consumers have found themselves harassed, hectored, and micromanaged,” David B. McGarry has <a href="https://www.nationalreview.com/author/david-b-mcgarry/" target="_blank" rel="noopener">written</a>. “The New York Times summed up the license taken by the agency well, <a href="https://archive.is/o/SrPsD/https:/www.nytimes.com/2023/10/01/business/rohit-chopra-consumer-financial-protection-bureau-wallstreet.html" target="_blank" rel="noopener">writing</a> that ‘Chopra insists that he always follows the rules,’ but ‘his view is that he’s simply more expansive than others in determining what those rules are.’ As Chopra’s tenure shows, ‘more expansive’ quickly expands into lawlessness.”
On May 24, 2018, President Trump signed into law the <a href="https://en.wikipedia.org/wiki/Economic_Growth,_Regulatory_Relief_and_Consumer_Protection_Act" target="_blank" rel="noopener">Economic Growth, Regulatory Relief and Consumer Protection Act</a>, which exempted numerous banks from the CFPB&#8217;s regulations.
On Wednesday, Warren, speaking of debanking, said her staff “found that just four big banks, Bank of America, JP, Morgan, Wells Fargo and Citibank, accounted for half of all the complaints filed at the CFPB.”
She then praised Trump. saying, “Donald Trump was on to a real problem when he criticized Bank of America for its debanking practices.”
<iframe loading="lazy" title="YouTube video player" src="https://www.youtube.com/embed/jI_YRTHZwzo?si=e7w2FHjaYdlgA-1a" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe>
Then she made her pitch for her brainchild, arguing, “We can prevent these abuses. I know that the Consumer Financial Protection Bureau is a favorite whipping boy of the Republicans on this committee, but the CFPB is the main agency in our government that is actively working to stop unfair debanking. Let me say that again, the CFPB is the one agency that is actively working to stop unfair debanking. Right now, the agency has five different rules, either in place or in progress, that would help prevent debanking by addressing some of the root causes, from overdraft fee practices to religious discrimination, and the CFPB is working to hold banks accountable when they close law-abiding citizens and businesses accounts for no good reason.”
“I sent a letter to President Trump today that walks through the CFPB&#8217;s work. &#8230; I said that the CFPB is the one agency fighting back against debanking, but that may be at risk. Earlier this week, Treasury Secretary and acting CFPB Director Scott Bessent halted all CFPB rule-making enforcement, investigations and litigation against financial institutions that are breaking the law, including the banks that are wrongfully debanking their customers. The freeze Secretary Bessent put on the CFPB means more Americans across this country will be unfairly debanked, and they will lose the one agency that is working to help them.”

Elizabeth Warren

LOL: Warren, Desperate To Protect Her Brainchild That’s On Chopping Block, Actually Praises Trump

Congress

debanking

Politics

Ted Cruz

Just days into the second Trump administration, Republicans in Washington are facing an unexpected and poorly understood headwind to unleashing our economic potential, courtesy of the Consumer Financial Protection Bureau and the leadership of Biden bureaucrats.
Under the <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-personal-financial-data-rights-rule-to-boost-competition-protect-privacy-and-give-families-more-choice-in-financial-services/">CFPB’s Biden-era 1033 Rule</a>, also known as the “Banking Data Exposure Rule,” American banks will soon be compelled to increase the flow of sensitive financial data to banks and businesses worldwide, with insufficient safeguards and proper oversight. The implications are enormous, and the risks cannot be overstated. 
Progressive proponents like Senator Elizabeth Warren (D-MA) might be cheering this misguided rule under the guise of empowering the consumer. But because the rule is so poorly constructed, it will only benefit a minority of well-informed consumers while creating new and potentially life-changing hazards for many Americans and businesses.
The Banking Data Exposure Rule opens a digital Pandora’s Box. By mandating that banks facilitate unprecedented access to consumers&#8217; financial data, the CFPB is creating a hunting ground for malicious cybercriminals and foreign state actors to exploit. This rule places anyone with a checking or savings account — be it an individual, a business, a municipal government, or even a hospital system — at risk of falling victim to sophisticated schemes designed to gain unauthorized access to funds and sensitive data.
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The rule’s design offers bad actors a roadmap for exploitation, making the CFPB a de facto enabler of potential financial harm. Under the 1033 Rule, banks are essentially powerless to ensure their customers are not being duped by bad actors masquerading as legitimate third parties — a key point seemingly missed by the Biden administration and supporters.
Consider the broader implications of a foreign adversary using this framework to infiltrate a utility company’s financial records, hold a hospital’s payroll system hostage, or drain the retirement savings of an unsuspecting senior citizen. The CFPB’s poorly conceived rule could trigger cascading consequences across critical sectors of the U.S. economy, suppressing the nation’s optimism for an economic revival under the Trump administration and Republican-led Congress.
Proponents claim the ends will justify the means by enhancing competitive innovation and streamlining financial services. However, the 1033 Rule presumes that these benefits outweigh the risks to data security and privacy.
The CFPB’s actions undermine the reasonable demands Congress has made of banks to protect sensitive financial data and secure access to accounts. The rule establishes a false dichotomy between safeguarding consumer information and the promise of open banking, stripping consumers of their agency in making this decision. In reality, we can and should demand both security and innovation from our financial institutions.
Worse still, the Banking Data Exposure Rule is an ideologically-driven mandate. CFPB officials are misusing the Dodd-Frank Act to orchestrate a shift to an “open banking” framework that was largely theoretical when the bill was signed into law nearly 15 years ago. Open banking should only proceed with clear congressional authorization — not unelected, newly-unemployed, bureaucrats — following deliberation on the risks and merits of such a fundamental shift in the financial system.
The CFPB’s overreach in this instance sets a dangerous precedent for unchecked regulatory intervention in other critical sectors of the economy. Congress has a responsibility to rein in the CFPB before the 1033 Rule takes effect. Lawmakers should recognize that while open banking policies are worthy of debate, there is no urgency to enact radical changes nor necessity to do so without considerable public debate. It is a mandate ripe for rollback.
Financial innovation should not come at the expense of data security and consumer trust. Instead, we should pursue reforms that achieve both priorities without exposing Americans to unnecessary risks. By cancelling the 1033 Rule, Congress can send a clear message: safeguarding the financial security of the American people is not up for compromise.
The time to act is now. This is a fight for the integrity of our financial system and the protection of American consumers. Congress must ensure that innovation in banking is built on a foundation of trust, security, and proper oversight — not reckless experimentation.
Doug Wheeler is the Director of the George Gibbs Center for Economic Prosperity at The James Madison Institute (JMI), a free market public policy research organization based in Florida.

Fed Meets As Speculation Builds On Possible Rate Cut

This Biden-Era Banking Rule Is A Pandora’s Box Of Financial Risk

Banking

Biden Administration

The Department of Justice (DOJ) put financial institutions on notice for rejecting <a href="https://www.dailywire.com/topic/illegal-immigration" target="_blank" rel="noopener">illegal immigrants</a>’ credit applications.
The DOJ <a href="https://www.justice.gov/opa/pr/justice-department-and-consumer-financial-protection-bureau-issue-joint-statement-cautioning" target="_blank" rel="noopener">issued</a> the warning in a joint statement with the Consumer Financial Protection Bureau (CFPB) on Thursday. The DOJ and CFPB said in a press release that illegal immigrants had filed complaints about credit application rejections.
“The Justice Department and CFPB are issuing this statement because consumers have reported being rejected for credit cards as well as for auto, student, personal and equipment loans because of their immigration status, even when they have strong credit histories and ties to the United States and are otherwise qualified to receive the loans,” stated the agencies.
The two agencies <a href="https://www.justice.gov/d9/2023-10/joint_statement_on_fair_lending_and_credit_opportunities_for_noncitizen_borrowers_final_.pdf" target="_blank" rel="noopener">claimed</a> that the Equal Credit Opportunity Act (ECOA) protections for national origin and race extended to alienage, though they admitted that no such explicit provisions spelled out their interpretation. The agencies conceded that creditors could rely on immigration status to determine repayment ability, but then cautioned against “unnecessary or overbroad reliance” on immigration status.
“[W]hile ECOA and Regulation B do not expressly prohibit consideration of immigration status, they do prohibit creditors from using immigration status to discriminate on the basis of national origin, race, or any other protected characteristic,” said the agencies. “Immigration status may broadly overlap with or, in certain circumstances, serve as a proxy for these protected characteristics.”
Regulation B, which provides additional rules for evaluating credit applications, lists immigration status as a valid reason for denying an applicant to assure “creditor’s rights and remedies regarding repayment.” The agencies further asserted that since no explicit permissions existed, creditors couldn’t discriminate on the basis of citizenship status unless they could prove significant repayment concerns.
The agencies further warned against “overbroad consideration” of certain procedures, such as questioning the length of time an individual has possessed a Social Security number or requiring certain types of documentation, ID, or in-person application materials. The agencies warned that these screening tactics could be interpreted as unlawful discrimination on the basis of national origin or race.
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In closing, the agencies interpreted the 1866 Civil Rights Act, dubbed <a href="https://uscode.house.gov/view.xhtml?path=/prelim@title42/chapter21&amp;edition=prelim" target="_blank" rel="noopener">Section 1981</a>, to declare that illegal immigrants have the same rights and protections as citizens.
“[C]reditors should be mindful of their obligations under 42 U.S.C. § 1981 (Section 1981) [which] has long been construed to prohibit discrimination based on alienage,” said the agencies. “[C]ourts have observed that ECOA’s prohibition of national origin discrimination and Section 1981’s prohibitions complement one another and that discrimination that arises from overbroad restrictions on lending to noncitizens may violate either or both statutes.”
The Supreme Court has not weighed in on whether Section 1981 extends to alienage, but the Fourth Circuit Court of Appeals <a href="https://www.ca4.uscourts.gov/opinions/212211.P.pdf" target="_blank" rel="noopener">did</a> as recently as July.
Under the ECOA, the DOJ may <a href="https://www.justice.gov/crt/equal-credit-opportunity-act-3" target="_blank" rel="noopener">sue</a> those alleged to have engaged in a pattern or practice of discrimination concerning race, color, religion, sex, sexual orientation, and gender identity in addition to national origin.
According to the DOJ’s latest annual fair lending <a href="https://www.justice.gov/media/1259491/dl?inline" target="_blank" rel="noopener">report</a> from 2021, there were five referrals involving claims of race or national origin discrimination. The 2022 report has yet to be issued.
CFPB’s latest fair lending <a href="https://files.consumerfinance.gov/f/documents/cfpb_fair-lending-report_2023-06.pdf" target="_blank" rel="noopener">report</a>, from 2022, did mention prioritizing the financial needs of immigrants. CFPB issued four referrals involving discrimination on the basis of race and national origin in mortgage lending to the DOJ last year.

Credit Card

DOJ Warns Financial Institutions That They Can’t Reject Illegal Immigrants’ Credit Applications

credit card

Department of Justice

Illegal Immigration

A former employee of the <a href="https://www.dailywire.com/topic/consumer-financial-protection-bureau" target="_blank" rel="noopener">Consumer Financial Protection Bureau</a>, also known as the CFPB, sent personal <a href="https://www.dailywire.com/topic/cybersecurity" target="_blank" rel="noopener">data</a> for hundreds of thousands of people to a personal email account, the agency confirmed this week.
The since-dismissed staffer for the agency, which is responsible for protecting consumers in the financial sector, made an unauthorized transfer of records for 256,000 customers of an unnamed financial institution, as well as confidential information for 45 other institutions, an agency spokesperson <a href="https://www.wsj.com/articles/in-major-incident-cfpb-says-staffer-sent-250-000-consumers-data-to-personal-account-fdc0a540" target="_blank" rel="noopener">confirmed</a> with The Wall Street Journal. The spokesperson clarified that most of the records were linked to consumers at one institution, although personal data from consumers from seven other unnamed firms were implicated.
CFPB officials informed the House Financial Services Committee about the “major incident” on March 21, according to a <a href="https://financialservices.house.gov/uploadedfiles/2023-04-18_huizenga_to_chopra_re_breach.pdf" target="_blank" rel="noopener">letter</a> that Oversight and Investigations Subcommittee Chairman Bill Huizenga (R-MI) sent the agency. The lawmaker said the transfer, which occurred through 65 emails, contained attachments, names, and account numbers for the 256,000 individuals.
The spokesperson for the CFPB said the breach was limited to two spreadsheets and lacked information that could be used to access the customers’ accounts, according to the report from The Wall Street Journal, which was the first outlet to publicize the news. The former employee nevertheless did not comply with a request from the agency to delete the emails from the personal account, as well as “certify” and “provide attestation” that each message was deleted.
Senate Banking Committee Ranking Member Tim Scott (R-SC) added in a separate <a href="https://www.banking.senate.gov/imo/media/doc/cfpb_letter_data_breach.pdf" target="_blank" rel="noopener">letter</a> on Wednesday that the CFPB finalized a rule on data collection from small businesses in the time since the discovery of the breach, a move which the lawmaker considers worrisome since the agency “has provided limited insight” on its data management practices.
“Why should the CFPB be trusted to collect more data, burdening financial institutions and potentially limiting services for consumers, when they themselves have demonstrated an irresponsible handling of consumer’s financial information?” Scott asked in a <a href="https://www.banking.senate.gov/newsroom/minority/scott-seeks-answers-on-cfpb-data-breach" target="_blank" rel="noopener">statement</a>. “Our regulators and agencies need to take responsibility for their failures and must be held accountable.”
The Wall Street Journal noted that the breach at the CFPB seems to be less severe than other incidents which constituted federal data breaches, such as the hack of more than 20 million individuals’ records from the Office of Personnel Management in 2014.
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One recent <a href="https://www.dailywire.com/news/feds-jeopardized-security-of-1m-americans-online-accounts-citing-equity" target="_blank" rel="noopener">investigation</a> from The Daily Wire found that the General Services Administration was required to create a system that federal agencies could use to protect sensitive data in accordance with the National Institute for Standards and Technology’s Identity Assurance Level 2. Officials charged with building the system neglected to use biometrics such as facial recognition, eye scans, or fingerprints to verify those seeking access to sensitive data, even though the standards were required for compliance. Officials opted to ignore the rules because they believed facial recognition technology might discriminate based on skin color.
A subsequent <a href="https://www.oversight.gov/sites/default/files/oig-reports/GSA/GSA-Misled-Customers-Logingovs-Compliance-Digital-Identity-Standards-JE23-003Redacted.pdf" target="_blank" rel="noopener">audit</a> from the General Services Administration Inspector General found that senior officials ignored insiders who noted that the product was not truly secure and that the officials misled agencies into believing they were withdrawing a webcam security feature because of a new policy on equity.

Hands of teenage boy breaching data from computer on desk

Consumer Protection Bureau Staffer Sent 256,000 People’s Data To Personal Account

Consumer Protection Bureau Staffer Forwarded 256,000 People's Data To His Personal Account

Crime

Cybersecurity

President <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">Joe Biden</a> devoted a significant amount of airtime during his <a href="https://www.dailywire.com/topic/state-of-the-union" target="_blank" rel="noopener">State of the Union</a> address on Tuesday toward the inconvenience that “junk fees” cause to the typical consumer, suggesting that federal action should be taken to eliminate the charges.
Junk fees, the hidden charges that are not included in the ticket price for a transaction but appear when a consumer eventually pays for the product or service, are common in sectors such as air travel, personal finance, banking, and hospitality. Biden called upon lawmakers to create a Junk Fee Prevention Act that would <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/01/fact-sheet-president-biden-highlights-new-progress-on-his-competition-agenda/" target="_blank" rel="noopener">crack down</a> on concert and sporting ticket fees, phone and internet early termination fees, resort and destination fees, and certain airline fees.
“Junk fees may not matter to the very wealthy, but they matter to most folks in homes like the one I grew up in. They add up to hundreds of dollars a month,” Biden commented in the <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/02/07/remarks-of-president-joe-biden-state-of-the-union-address-as-prepared-for-delivery/" target="_blank" rel="noopener">address</a>. “They make it harder for you to pay the bills or afford that family trip. I know how unfair it feels when a company overcharges you and gets away with it. Not anymore.”
Several agencies have already examined the phenomenon and considered rules that would seek to reduce junk fees. Federal Trade Commission officials <a href="https://www.ftc.gov/news-events/news/press-releases/2022/10/federal-trade-commission-explores-rule-cracking-down-junk-fees" target="_blank" rel="noopener">requested</a> public comment at the end of last year on new regulations that would ban “unnecessary charges for worthless, free, or fake products or services.” For instance, Americans paid some $15 billion per year in bank overdraft fees as of 2019, according to a <a href="https://www.consumerfinance.gov/about-us/blog/hidden-cost-junk-fees/" target="_blank" rel="noopener">study</a> from the Consumer Financial Protection Bureau.
Despite the headaches they pose to consumers, nationwide regulations seeking to eliminate junk fees could prove ineffective and imprudent.
“The federal government should not be concerned with punishing companies for fees that someone doesn’t like,” Norbert Michel, vice president and director of the Cato Institute’s Center for Monetary and Financial Alternatives, told The Daily Wire. “People can refuse to pay the fee, complain, and go somewhere else. If large numbers of customers take any of those actions, chances are the company will adjust its policy.”
The United Kingdom’s Financial Conduct Authority, for instance, implemented <a href="https://www.fca.org.uk/news/statements/fca-gives-update-banks-overdraft-pricing-decisions-and-plans-support-consumers" target="_blank" rel="noopener">new rules</a> for overdraft fees between November 2019 and April 2020. Even as banks saw overdraft revenues decline between one-quarter and one-third, the agency admitted that “many of the banks’ new rates were similar” after the new restrictions were enacted; many of the financial institutions, however, had created a range of pricing structures from which their users could choose.
Michel added that consumers and businesses are more likely to find a solution without interference from regulators. “It makes little sense for the federal government to try to control fees, just as it makes it little sense for the federal government to try to control prices,” he said.
Previous calls for action against junk fees from senior White House officials have said that “lower income households and people of color” are more severely impacted by the charges. One <a href="https://www.whitehouse.gov/briefing-room/blog/2022/10/26/the-presidents-initiative-on-junk-fees-and-related-pricing-practices/" target="_blank" rel="noopener">analysis</a> from National Economic Council Director Brian Deese cited a <a href="https://files.consumerfinance.gov/f/documents/cfpb_credit-card-late-fees_report_2022-03.pdf" target="_blank" rel="noopener">study</a> from the Consumer Financial Protection Bureau noting that consumers in low-income and majority-black neighborhoods “paid disproportionately more in credit card late fees.” Another <a href="https://www.nclc.org/wp-content/uploads/2022/09/auto_add_on_rpt.pdf" target="_blank" rel="noopener">study</a> referenced by the official said Hispanic car buyers paid more in add-on costs than their counterparts.
Michel observed that disparity does not necessarily imply discrimination. “The fact that certain consumers pay more in late fees does not, by itself, mean that anything nefarious has occurred,” he continued.

US President Joe Biden speaks during a State of the Union address at the US Capitol in Washington, DC, US, on Tuesday, Feb. 7, 2023. Biden is speaking against the backdrop of renewed tensions with China and a brewing showdown with House Republicans over raising the federal debt ceiling.

Biden Wants Federal Action To Ban ‘Junk Fees.’ That Might Not Be A Good Idea.

Why Biden's Junk Fees Ban Might Not Be A Good Idea

Executive

State of the Union

Wells Fargo will pay $1.7 billion in civil penalties and $2 billion in redress after the <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> carried out a number of abuses concerning mortgages and consumer accounts.
According to a <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-wells-fargo-to-pay-37-billion-for-widespread-mismanagement-of-auto-loans-mortgages-and-deposit-accounts/" target="_blank" rel="noopener">press release</a> from the Consumer Financial Protection Bureau, the company illegally assessed fees and interest charges on various loans, wrongly repossessed cars, and misapplied mortgage payments, leading “thousands of customers” to lose their vehicles and homes. The bank also “charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts” in actions that affected 16 million users.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” Consumer Financial Protection Bureau Director Rohit Chopra remarked, adding that his agency is “ordering Wells Fargo to refund billions of dollars to consumers across the country.”
The $3.7 billion fine marks the largest in agency history.
Wells Fargo improperly denied thousands of mortgage loan modifications over seven years, leading some customers to lose their homes even as the bank was aware of the problem. The bank also charged surprise overdraft fees when account holders had enough deposits to cover the transactions.
Of the $2 billion in redress, $1.3 billion will be used for affected vehicle loans, $500 million for affected deposit accounts, and $200 million for affected mortgage accounts. The $1.7 billion penalty will be used for a victims&#8217; relief fund managed by the Consumer Financial Protection Bureau. Wells Fargo was also ordered to stop charging surprise fees and address oversights with respect to vehicle loans.
The news comes as inflationary pressures and rising interest rates increase the number of defaults on various types of consumer debt. The number of people behind on their car payments has approached pre-recession levels, while defaults have soared past levels seen in 2019 for low-income consumers, according to <a href="https://www.nbcnews.com/politics/economics/car-repossessions-are-rise-warning-sign-economy-rcna61916" target="_blank" rel="noopener">data</a> from Fitch Ratings obtained by NBC News.
Higher mortgage rates have contributed to plummeting demand in the housing market, even as fewer families can afford a home. Only 42% of American families earning $90,000 per year were able to afford new and existing properties sold between the beginning of July and the end of September, according to <a href="https://www.dailywire.com/news/housing-affordability-plummets-to-new-low-with-all-the-least-affordable-housing-markets-in-california" target="_blank" rel="noopener">data</a> from the National Association of Home Builders, corresponding to aggressive <a href="https://www.dailywire.com/news/breaking-federal-reserve-hikes-target-interest-rates-half-a-percentage-point" target="_blank" rel="noopener">rate hike decisions</a> from the Federal Reserve meant to cut inflation.
Chopra characterized Wells Fargo as a “repeat offender.” Indeed, the bank agreed to pay $3 billion in February 2020 after employees were pressured to “meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities,” according to a <a href="https://www.justice.gov/opa/pr/wells-fargo-agrees-pay-3-billion-resolve-criminal-and-civil-investigations-sales-practices" target="_blank" rel="noopener">statement</a> from the Justice Department.
Wells Fargo faced criticism earlier this year after a <a href="https://www.dailywire.com/news/wells-fargo-conducts-fake-interviews-to-boost-diversity-numbers-current-and-former-employees-claim" target="_blank" rel="noopener">report</a> from the New York Times found executives had conducted fake interviews with female and minority applicants to meet diversity, equity, and inclusion thresholds. The company had paid $7.8 million in August 2020 to settle a claim from the Department of Labor asserting that the bank <a href="https://www.dol.gov/newsroom/releases/ofccp/ofccp20200824" target="_blank" rel="noopener">discriminated</a> against more than 34,000 African-American applicants for banking, customer sales, and administrative support positions, as well as over 300 female applicants for administrative support positions.

Wells Fargo Agrees To Pay $3.7 Billion, Largest CFPB Banking Fine To Date

Bank Will Fork Over $3.7 Billion After ‘Thousands’ Wrongly Lose Homes And Vehicles

Wells Fargo Ordered To Pay $3.7 Billion After ‘Thousands’ Wrongly Lose their Vehicles And Homes

Banks

Business

Economy

The federal government is launching a probe into the nascent “Buy Now, Pay Later” industry.
Buy Now, Pay Later — a short-term financing option that <a href="https://www.cardify.ai/reports/bnpl-holidays-2021">lets</a> consumers make purchases and pay at a future date, often interest-free — is increasing in popularity. Typically offering their services at checkout, BNPL companies such as Klarna, Afterpay, and Affirm have <a href="https://wfhadviser.com/guides/buy-now-pay-later-bnpl-market-analysis-overview-and-leading-companies-by-use-case/">diverted</a> between $8 billion and $10 billion in annual revenue away from banks.
Citing concerns about “accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology,” the <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-opens-inquiry-into-buy-now-pay-later-credit/">Consumer Financial Protection Bureau</a> announced on Thursday that it will “collect information” from Affirm, Afterpay, Klarna, PayPal, and Zip.
“The law requires that the CFPB monitor consumer financial markets and enables the agency to require market players to submit information to inform this monitoring,” said the agency in a statement. “The CFPB expects to publish aggregated findings on insights learned from this inquiry. Today’s orders seek to illuminate the range of these consumer credit products and their underlying business practices.”
“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” commented CFPB Director Rohit Chopra in the release. “We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”
As <a href="https://www.dailywire.com/news/more-americans-than-ever-will-use-buy-now-pay-later-plans-for-holiday-purchases">The Daily Wire</a> reported last month, American consumers plan to rely upon Buy Now, Pay Later throughout the holiday season. According to a survey from <a href="https://www.cardify.ai/reports/bnpl-holidays-2021">Cardify</a>:
<blockquote>Nearly half (45.1%) of users said they will be paying for part — or all — of this year’s holiday purchases using BNPL. When asked to share the full list of payment methods they’ll be using, BNPL came in third place behind debit (65.7%) and credit cards (54.6%). Consumers would rather pay for holiday purchases using BNPL than cash (31.5%). Among those who plan to use BNPL this holiday season (“Holiday BNPL Shoppers”), 46.6% will use BNPL for more than half (37.8%) or even all (8.6%) of their holiday purchases.
Data also suggests that users are increasingly comfortable with the service, as 51.1% of Holiday BNPL Shoppers plan to use BNPL for more of their shopping this holiday season than they did last holiday season. While 38.9% plan to use it the same amount, only a minority (10.1%) plan to use it less. If BNPL was not an option this holiday season, those who planned to use it said they’d resort to a debit card (51.6%), credit card (49.9%), or be forced to spend less (45.8%).</blockquote>
“It’s become more mainstream,” explained Cardify CEO Derrick Fung as reported by <a href="https://www.cnbc.com/2021/11/29/holiday-shopping-2021-more-than-half-of-americans-are-going-into-debt.html">CNBC</a>. “The consumer over the last 12 months has become more compulsive and BNPL products are the result of us being locked up for too long and wanting more instant gratification.”
Beyond the new deferred payment methodology, Americans have been eager to receive short-term cash infusions in the form of government stimulus checks. A <a href="https://www.dailywire.com/news/moneyforthepeople-petition-for-2000-monthly-covid-checks-nears-3-million-signatures">survey</a> from Quinnipiac University in January found that 78% of Americans — including 90% of Democrats and 64% of Republicans — approved of the $1,400 checks supported by President Biden.

Federal Government Launches Probe Into ‘Buy Now, Pay Later’ Industry

Richard Cordray — a longtime ally of progressive Sen. Elizabeth Warren (D-MA) — is being considered for a key Federal Reserve position.
According to a <a href="https://www.cnbc.com/2021/11/30/elizabeth-warren-ally-richard-cordray-under-discussion-for-fed-bank-supervisor.html">CNBC</a> report, Sen. Sherrod Brown (D-OH) has “spoken to the Biden administration about Cordray and others who could serve as the Fed’s vice chair for supervision.” <a href="https://www.wsj.com/articles/white-house-considering-richard-cordray-as-top-fed-banking-regulator-11638285603">The Wall Street Journal</a> characterizes the position as “the government’s most influential overseer of the U.S. banking system.”
“I know Rich Cordray well. I like him,” Brown told CNBC. “I’m talking to the White House about him and a number of other people.”
CNBC adds that Cordray is a “likely favorite” of Warren, who worked alongside Cordray when the pair helped to lead the Consumer Financial Protection Bureau. Warren recommended that President Barack Obama appoint Cordray to lead the agency’s enforcement arm; however, Obama appointed him to lead the entire agency.
Before the Consumer Financial Protection Bureau, Cordray served as attorney general of Ohio. He currently works as the chief operating officer of Federal Student Aid — the federal government’s $1.6 trillion student loan agency.
The White House directed CNBC toward a statement made on November 22 about the open central bank positions.
“President Biden still has three vacant seats on the Federal Reserve Board of Governors to fill, including the important position of Vice Chair for Supervision,” the White House said. “The President intends to make those appointments beginning in early December, and is committed to improving the diversity in the Board’s composition.”
Meanwhile, Republican lawmakers are extremely wary of Cordray’s potential confirmation.
“Richard Cordray’s disastrous and divisive tenure at the CFPB raises serious questions about how he might undermine the Fed’s independence and nonpartisan reputation,” Senate Banking Committee Ranking Member Pat Toomey (R-PA) told <a href="https://www.axios.com/gop-warns-cordray-fed-f62ad05a-8de0-48a2-b0be-d310c7dae364.html">Axios</a>. “This is the individual who helped Elizabeth Warren stand up an agency so unaccountable the Supreme Court took away its independent status. I’d hope the White House considers less divisive figures for this role.”
“I like Richard. I respect Richard. Richard is to the left of Lenin,” Sen. John Kennedy (R-LA) told <a href="https://www.wsj.com/articles/white-house-considering-richard-cordray-as-top-fed-banking-regulator-11638285603">The Wall Street Journal</a>.
If officially nominated, Cordray would not be the only recent Biden economic appointee to stir controversy. The Commander-in-Chief recently tapped Cornell University law professor Saule Omarova to serve as Comptroller of the Currency — a Treasury Department position that “charters, regulates, and supervises all national banks.”
Omarova’s nomination made waves after the discovery of posts displaying apparent <a href="https://www.dailywire.com/news/biden-bank-regulator-nominee-say-what-you-will-about-old-ussr-there-was-no-gender-pay-gap">sympathy</a> toward the Soviet Union and its purported gender equality. Omarova has likewise <a href="https://www.dailywire.com/news/key-biden-nominee-on-oil-companies-we-want-them-to-go-bankrupt-if-we-want-to-tackle-climate-change">called</a> for the bankruptcy of oil and gas companies to fight global warming, <a href="https://www.campusreform.org/article?id=18281">argued</a> that the Federal Reserve should manage consumer bank deposits, and <a href="https://www.dailywire.com/news/biden-nominee-who-praised-soviet-unions-lack-of-gender-pay-gap-hasnt-turned-over-karl-marx-thesis-to-senate">drafted</a> a thesis entitled “Karl Marx’s Economic Analysis and the Theory of Revolution in Das Kapital” during her college years.
Norbert Michel — who directs the Cato Institute’s Center for Monetary and Financial Alternatives — told <a href="https://www.dailywire.com/news/why-controversial-biden-nominee-saule-omarova-would-be-disastrous-as-a-key-treasury-official">The Daily Wire</a> that Omarova would federalize the American banking sector. If confirmed, Omarova and other officials would have the power to “be allocating credit and funds” — deciding “who gets loans and straight transfers of money” — by putting money into people’s accounts or taking money out of their accounts. Under her regime, “the private sector could not compete with the federal government.”

Richard Cordray Holds Campaign Event At Former RG Steel Plant In Warren, Ohio

‘To The Left Of Lenin’: Elizabeth Warren Associate May Serve As Top Fed Official

Next week, the Supreme Court will start to hear oral arguments about a massive government agency (an idea <a href="https://www.vox.com/policy-and-politics/2019/9/20/20867899/elizabeth-warren-cfpb-founding-plans-obama-president">originally proposed by Elizabeth Warren</a> that now has <a href="https://files.consumerfinance.gov/f/documents/201905_cfpb_FY-2018_MD-715_annual-report.pdf">roughly 1,500 employees)</a> which can affect thousands of businesses across the country without being accountable to anyone but itself.
The Consumer Financial Protection Bureau (CFPB) in its present form escapes the separation of powers enumerated in the Constitution and holds power to destroy businesses at will. As Oliver Dunford of the Pacific Legal Foundation wrote last October in <a href="https://thehill.com/opinion/judiciary/466347-supreme-court-will-take-on-fourth-branch-of-bureaucracies">The Hill</a>:
<blockquote>The CFPB may prescribe rules and regulations under various consumer-protection laws; enforce conduct that it may define as ‘unfair, deceptive or abusive’; and adjudicate its own enforcement actions and impose legal and equitable remedies. Right away, you’ll notice by that brief description that the CFPB captures the roles and responsibilities of all three branches of government under one roof. So much for separation of powers.
So let’s say your company is accused of violating a CFPB rule. The CFPB can sue you in court or — at its sole discretion — subject you to an administrative-enforcement hearing, administered by the CFPB. If you don’t like the CFPB’s in-house decision, you can appeal — to the CFPB’s director. And only after the director’s decision could you seek review in a court of law.
But the deck is stacked even then, because courts are required to defer to the CFPB’s factual findings and legal conclusions. The ultimate outcome of this concentration of discretionary power, together with its significant independence of the three traditional branches of government, is arbitrary and abusive government.</blockquote>
The Pacific Legal Foundation asked in a <a href="https://www.supremecourt.gov/DocketPDF/19/19-7/109607/20190729134534667_Seila%20Law%20Amicus%20Brief%20-%20July%2026%202019%20-%20Final.pdf">friend-of-the-court brief</a> in the case of Seila Law v. CFPB, “Whether the vesting of legislative, executive, and judicial powers in the Consumer Financial Protection Bureau, an independent agency led by a single director who cannot be removed except for cause, violates the separation of powers.”
The brief continued, “This case presents the Court with a unique and dangerous concentration of the federal government’s legislative, executive, and judicial powers in a single, ‘independent’ agency; an agency headed by a lone ‘Director’ empowered with vast executive discretion but protected from removal except for cause; an agency whose actions enjoy an unprecedented freedom from oversight by the government’s constitutionally vested powers. The combination of authority, discretion, and impunity in this independent power all but guarantees arbitrary governance. This is, therefore, ‘a case about executive power and individual liberty.’”
The brief added, “Created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB or Bureau) and its lone Director were given vast powers—legislative, executive, and judicial—along with substantial protections against interference by the three constitutional powers of government. As then-Judge Kavanaugh noted, with the exception of the President, the CFPB Director &#8216;enjoys more unilateral authority than any other official in any of the three branches of the U.S. Government.&#8217;”
More:
<blockquote>The Bureau was given vast discretion to determine how it may enact these generally applicable rules, and it is not limited to the formal rulemaking process. The CFPB is authorized to “establish the general policies of the [CFPB] with respect to all executive and administrative functions,” including “implementing the Federal consumer financial laws through rules, orders, guidance, interpretations, statements of policy, examinations, and enforcement actions.” Perhaps most troubling, this power allows the CFPB to use administrative-enforcement actions (which, as noted below, are subject to deferential judicial review), not only to enforce existing rules, but also to establish new policies—that is, to punish conduct that was, before an enforcement action, perfectly legal.
The CFPB is also largely free of congressional oversight. Most significantly, the CFPB’s budget does not go through Office of Management and Budget review, and it is not submitted to Congress for annual appropriations subject to the relative priorities of the President and Congress. Instead, the CFPB Director—alone— sets the agency’s budget; and its funds come not from Congress (pursuant to an appropriations bill signed into law by the President), but from the Federal Reserve, which “shall transfer” to the CFPB funds in “the amount [up to 12 percent of the Federal Reserve’s operating budget] determined by the [CFPB] Director to be reasonably necessary” to administer the consumer-protection laws. These funding decisions are effectively unreviewable.</blockquote>
&nbsp;

Julian Castro Joins Elizabeth Warren On The Campaign Trail In Iowa

Warren-Created Agency That Targets Businesses, Accountable Only To Itself, Challenged in Supreme Court

Supreme Court

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