Illegal CFPB Purge? Fast Court Order!
How can you suddenly and illegally decide to fire nearly 1,500 people that have devoted their careers to making sure that Wall Street banks, predatory lenders, and credit bureaus can’t take advantage of everyday people? The Trump administration hasn’t quite figured it out. But that hasn’t stopped it from trying.
Fortunately, a federal judge stepped in to stop it – for now.
Last Thursday, the Trump administration attempted to oust almost 90 percent of the workforce at the Consumer Financial Protection Bureau, the consumer watchdog that has spent the better part of 14 years getting $21 billion from abusive financial actors and putting it back into the wallets of millions of everyday people.
U.S. District Judge Amy Berman Jackson said she was “deeply concerned” that the Trump administration was flouting an earlier order when she ruled on Friday that the agency couldn’t move forward with its mass-firing plans.
The layoff decision came only a day after Acting Director Russell Vought announced that the agency would be moving away from a number of important areas of focus, such as medical debt, Big Tech, and student loans. Vought has also previously kept examiners from doing their work, despite the agency’s statutory obligation to – wait for it – conduct examinations.
Americans for Financial Reform identified the aborted move as part of a series of escalating attacks on the CFPB and the communities it protects, writing that the Trump administration “is risking the financial stability of millions to serve the interests of corporations and Big Tech.” AFR and a broad coalition agreed with the district court’s decision to halt the firings. Said AFR’s Amanda N. Jackson:
The attempted firing of 1,500 dedicated public servants was not only a threat to the livelihoods of workers, but to the millions of people who count on the CFPB to hold financial actors accountable. We thank the court for recognizing what the law and the public interest demand — that the CFPB must remain open, functioning, and fully staffed to fulfill its mandate to protect consumers.
At April 5’s nationwide #HandsOff rallies, many people proactively backed a strong CFPB, as calls to #SaveTheCFPB came amid mass protests for the administration to keep its hands off of vital consumer programs and agencies.
There is, wrote Jackson in response to a chilling Wall Street Journal op-ed that called for an alternative approach to still shutting the agency down anyway, no “right way” to close the CFPB; it has to remain open and independent, especially in the face of this “all out attack.”
BANKING AND FINANCIAL STABILITY: Capital One/Discover – Making the Economy Unsafe – NCUA Ouster – Bowman on Whose Side? – Living Wills – The FDIC Lets DOGE in – BaaS Bankruptcy – Wall Street is Bad for Your Health
CONSUMER: Medical Debt – Coerced Debt – Credit Card Late Fees – Predatory Payday – Credit Union Junk Fees – MoneyGram
CAPITAL MARKETS: Atkins Unfit to Serve – The Trojan Horse – More Info Needed
PRIVATE MARKETS: An Unfair Tax Code – PE Isn’t Worth the Risk – Fire Trucks
CRYPTO: Priorities, People – Hidden Road
HOUSING: Flouting Fair Housing – Reinvesting in the Community…Or Not – Paid How Much? – Who’s in Housing?
CLIMATE AND FINANCE: Protecting People from Disaster
POLITICS AND MONEY: Republicans Profiting from Turmoil – Trump’s Billionaire Clique – A Warning from Warren
Feedback? Reach us at afrnews@ourfinancialsecurity.org
BANKING AND FINANCIAL STABILITY
Capital One/Discover.
The Federal Reserve and Office of the Comptroller of the Currency greenlit a plan by Capital One and Discover, already among the largest financial services companies in the country, to merge their operations and create the biggest credit card company in the United States. Since the initial proposal, AFR has warned against the anticompetitive, risky, and anti-consumer effects of such a combination. Earlier this month, AFREF and other organizations urged the Department of Justice and bank regulators to block the merger.
Said AFR’s Patrick Woodall:
The Trump administration’s approval of the biggest, most complex bank merger in decades will raise credit card costs for working families, sap the earnings of small businesses, and undermine community investment. It’s no surprise that an administration packed with Wall Street heavies would rubber-stamp a merger that creates another too-big-to-fail megabank while it is simultaneously unraveling critical consumer protection and safety and soundness rules designed to protect families and the economy from financial crisis.
Making the Economy Unsafe.
On April 9, House Republicans overturned CFPB rules that would have capped overdraft fees charged by banks and rein in Big Tech companies that wanted to offer financial products, such as Apple, Google and even Elon Musk’s X. The decision will potentially cost everyday consumers billions, as the overdraft fee rule alone was expected to save families across the nation nearly $5 billion a year.
Meanwhile,Treasury Secretary Scott Bessent hinted at weaker financial system guardrails on the horizon. He told the American Bankers Association that he wanted his department to take a more central role in bank regulation, indicating plans to scale back bank capital requirements, support changes to anti-money laundering laws, and pursue “more tailored regulation” – that’s code for deregulation – for certain classes of banks.
NCUA Ouster.
The Trump administration illegally fired Tanya Otsuka and Todd Harper, two Democratic members of the National Credit Union Administration’s board who have vocally advocated for protecting consumers. AFR calls it another effort to “incapacitate the agencies responsible for protecting everyday consumers and safeguarding the financial system.
Wrote Otsuka: “President Trump has decided to put politics above consumers and the safety of our financial system.”
Harper wrote: “If a President can fire an NCUA Board member at any time, how will we maintain public trust in our nation’s financial services regulatory system?”
Bowman on Whose Side?
In a letter, Sen. Elizabeth Warren questioned whether Trump’s nominee to serve as the Federal Reserve’s top bank supervisor and regulator, Michelle Bowman, is up to the job:
“During your six and a half-year tenure on the Federal Reserve Board, you have prioritized the interests of Wall Street ahead of the needs of the nation’s hardworking families and small businesses…Pursuing Wall Street deregulation at a time of broad economic turmoil caused by President Trump’s clumsy approach to tariffs would be especially dangerous. President Trump is fanning the flames of disaster with his mismanagement of the nation’s economy. And I am concerned that instead of showing up with the fire department, you will bring a can of gasoline.”
Living Wills.
The FDIC is rolling back parts of its “living will” requirements for banks, no longer requiring banks to plan for orderly resolution in the event of collapse. Acting Chair Travis Hill said the new approach will prioritize actionable information to help the agency quickly market or operate a failing bank, aiming to avoid the costly deposit runs seen after the 2023 collapses of Silicon Valley Bank and Signature Bank. The FDIC will abandon detailed bridge bank resolution strategies and instead focus on preparing for rapid sales, a recipe for disaster that will make floundering banks unprepared and more likely to fail, increasing the chances that the FDIC will have to unload failed banks in fire sales that harm the financial system and increase costs to the taxpayer. The new guidance will be issued as an FAQ in the coming days.
The FDIC Lets DOGE in.
The Federal Deposit Insurance Corporation (FDIC), the bank supervisor that also covers deposit losses in the event of bank failures, has taken on staffers from Musk’s DOGE. Columbia University’s William D. O’Connell warns that the Trump administration’s incursion into this and other bank regulators risks repeating the mistakes that led to the 2008 financial crisis. Wrote O’Connell:
Dismantling or undermining the FDIC would strip the U.S. of one of its most effective ways to respond to a financial crisis. Weakening the FDIC, as has occurred with other U.S. federal agencies, would greatly reduce its ability to perform this function in the future. Fewer regulators means less oversight and more risk-taking behaviour by financial institutions.
BaaS Bankruptcy.
Solid, a banking-as-a-service (BaaS) company that acted as a go-between for banks and companies that wanted to offer financial services, filed for bankruptcy this month, while clients of a similar BaaS are still reeling from a bankruptcy that has left them up to $95 million in the hole. Just last year, Synapse, a similar middleware company that connected banks and nonbanks, collapsed and locked users of apps like Yotta out of their deposits at financial institutions like Evolve Bank & Trust. Solid, the latest in a string of high-profile BaaS bankruptcies, had also partnered with Evolve Bank & Trust – and it was linked to a “pig butchering” scam.
Wall Street is Bad for Your Health.
AFREF and the Health Political Economy Project hosted a webinar on how corporate greed and financial engineering are siphoning trillions of dollars from the healthcare system. The system, they asserted, is designed to divert public money and healthcare premiums from care and into shareholder pockets. Wrote AFREF’s Meron Lemmi: “Healthcare should serve the people, not only shareholders. Panelists called for stronger guardrails, including taxing or outright banning buybacks, and putting conditions on how public money can be spent. They also called for rethinking corporate governance to stop rewarding financial engineering.”
CONSUMER
Medical Debt.
Recent research underscores the limited predictive value of medical debt in assessing creditworthiness and highlights the potential benefits of removing such debt from credit reports. A National Bureau of Economic Research study found that small medical debts do not significantly predict defaults, suggesting that their removal from credit reports would have minimal impact on lending decisions. Complementing this, the Urban Institute reported that nearly 10 million consumers had medical debt in collections on their credit reports as of August 2024. The CFPB estimates that eliminating medical debt from credit reports could increase credit scores by an average of 20 points and lead to approximately 22,000 additional mortgage approvals annually. These findings suggest that removing medical debt from credit evaluations could enhance financial opportunities for many people without compromising lenders' ability to assess risk.
Coerced Debt.
AFREF supports a CFPB rulemaking effort that would provide relief to victims of coerced debt – a type of economic, intimate partner abuse in which someone coerces their partner into taking on non-consensual debt. This can lower someone's credit score and make it harder for survivors to to leave their abusers, access housing, secure new employment, or other resources tied to credit scores. A proposed rule would expand the definition of “identity theft” and “identity theft report” under Fair Credit Reporting Act to cover debt taken on without consent, so that survivors can more easily remove these debts from their credit reports.
Credit Card Late Fees.
Last week, Russell Vought’s CFPB teamed up with the Chamber of Commerce and banking industry, to reverse a rule that would have generally limited credit card late fees at $8, down from a previous high of as much as $41. They got their way when a federal judge scrapped the rule on Tuesday. Had this rule stayed in place, it would have already saved consumers nearly $10 billion in credit card late fees.
Predatory Payday.
New York Attorney General Letitia James sued payday lenders MoneyLion and DailyPay for targeting tens of thousands of New Yorkers with predatory, high-cost loans. Despite marketing their loans as earned wage advances, the companies actually charged fees and pressed users to give tips, making the equivalent APRs as high as 750 percent. The NY AG’s suit alleged that the companies used deceptive or fraudulent practices and advertising to lure customers.
The National Consumer Law Center supports the lawsuit and calls for other states to “resist slick industry efforts to create gaping loopholes in their interest rate limits that keep out predatory payday loans and new forms of predatory lending.”
Related: Between March 17 and April 10, members of the military filed several class action lawsuits against MoneyLion Technologies, Bridge It/Brigit, Dave Inc., Empower Finance, and FloatMe Corp, a group of cash advance companies that they allege have subjected servicemembers to “predatory” lending with their earned wage access apps. The plaintiffs say that the companies use deceptive advertising to peddle what amount to loans as being “no-interest,” despite charging a slew of charges and fees for users to access portions of their paychecks early.
Credit Union Junk Fees.
Although credit unions are supposed to be about “people helping people” – more so than their traditional bank counterparts – Jacobin notes that the National Credit Union Administration’s decision last month not to publish overdraft income for individual member unions will make it easier for them to hide how they are draining consumers with junk fees. Last year, the largest credit unions made nearly $4 billion from extraneous overdraft fees; Navy Federal, a credit union meant to serve 14 million military servicemembers or their families, extracted more than $724 million in junk fees last year.
Said the Consumer Federation of America’s Adam Rust:
We’ll have a system going forward where banks are under an obligation to report the [overdraft fee] data to the public and the credit unions aren’t. That’s in a direction that goes entirely contrary to where the relationship should be between those two types of institutions. It should be in a way that obligates credit unions to a higher standard.
MoneyGram.
Vought’s CFPB recently moved to dismiss a case that the agency had previously brought against MoneyGram, over the payment transmitter’s alleged failure to promptly deliver transfers, resolve disputes, and implement policies to comply with consumer protection laws – meaning that customers were often left with little defense when things went wrong. AFR chides the decision to vacate the case, pointing to it as one in a long line of lawsuits abandoned by the CFPB that “amount to corporate pardons for big banks, mortgage lenders, student loan companies, and other predatory lenders.”
Wrote AFR’s Christine Chen Zinner: “The Trump CFPB’s surrender in this case — and many others — sends a clear message to financial predators that they can rip-off their customers and violate consumer protection laws with impunity.”
CAPITAL MARKETS
Atkins Unfit to Serve.
The recent Senate nomination of Paul Atkins, a flawed candidate who has backed industry-friendly policies, comes at a time of great market turmoil that could threaten investors, retirees and pensions, equity markets and the broader economy. Said AFR’s Patrick Woodall:
The Trump SEC has already pulled back on enforcement and given a green light to crypto hucksters and now the Atkins chairmanship will open the floodgates for corporate misdeeds and chicanery that can threaten financial stability and the real economy. Gyrating markets need a steady hand on the tiller, but Atkins’ anything-goes approach that enriches his former clients and billionaire buddies will put people’s life savings at risk.
The Trojan Horse.
AFR’s Oscar Valdés Viera describes how congressional Republicans are advancing so-called capital formation legislation that are little more than Trojan horses designed to destroy protections for small investors, including safeguards for people’s retirement savings accounts. While the bills say they’re trying to help companies raise capital, they actually want to expose everyday investors to risky, illiquid parts of the market, such as private equity and private debt.
More Info Needed.
The SEC, under the leadership of Mark Uyeda, has delayed the implementation of a Gensler-era rule that would have given the public a clearer picture of certain Wall Street investors and their portfolios. Originally, agency rulemaking directed mutual funds and other investment companies – entities that use the money of multiple investors to purchase investments – to disclose their investments on a monthly basis, rather than a quarterly basis. Firms will now have two additional years to start complying. Previously, the Investment Company Institute, representing the fund industry, lobbied Uyeda to scale back the requirements.
PRIVATE MARKETS
An Unfair Tax Code.
Last week was Tax Day. Community Catalyst, AFR and other organizations joined together to make the case against a tax code that fuels health inequity and medical debt and encourages cuts to Medicaid. While teachers, EMTs, and nurses pay their fair share, corporations and the wealthiest people in America are handed tax breaks. And instead of investing in programs like Medicaid and SNAP, some lawmakers are pushing to slash $880 billion from Medicaid, terminating care for millions, including children, older adults, veterans, and people with disabilities.
Said AFR’s Oscar Valdés Viera:
Private equity firms are profiting off our healthcare system by slashing staff, hiking prices, and saddling hospitals with debt—all to extract quick profits. Meanwhile, the tax code rewards this exploitation by allowing private equity executives to pay lower rates on their massive payouts than the nurses and other workers keeping hospitals and nursing homes running. Closing the carried interest loophole is a critical step toward a fairer system that puts care over corporate greed.
PE Isn’t Worth the Risk.
Private equity has long courted universities to convince their multimillion-dollar endowments to do business with them, eager to expose them to risky speculation and gouge them with high management fees. The nation’s largest endowment, belonging to the University of California, has 20 percent of its funds invested in private equity and other, similarly illiquid alternative investments. An analysis by private market data firm Pitchbook found that the United States’ 50 largest endowments only pulled in an 8.3 percent return from private assets on average over 10 years. That places it just shy of the performance of a Vanguard mutual fund that only invested in less-risky stocks and bonds, according to the Center for Economic and Policy Research.
Wrote the CEPR’s Eileen Appelbaum: “Endowment funds got no extra payoff for investing in private equity funds or other private assets. The lesson? US endowment funds could have made the same return by joining with millions of ordinary people and investing in a plain vanilla mutual fund.”
And amid waning interest in holding onto private investments among institutional investors, as well as conditions that have made it difficult for the firms to sell off their existing portfolio companies, private equity wants to tap into the $12 trillion held in 401(k)s and other retirement plans. Johns Hopkins University warns of a lack of transparency, high fees, increased risk, and low liquidity.
Fire Trucks.
A recent New York Times article reports that Congress is investigating the impact of private equity ownership on fire truck manufacturing, amid concerns that such ownership may be contributing to delays in delivering emergency vehicles to municipalities. Lawmakers are examining whether the profit-driven strategies of private equity firms are affecting the production and availability of fire trucks, potentially compromising public safety. The investigation seeks to determine if these financial practices are leading to longer wait times and higher costs for essential emergency equipment. This scrutiny reflects broader apprehension about the influence of private equity in critical public service sectors.
CRYPTO
Priorities, People.
During a hearing held by the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age, House Financial Ranking Member Rep. Waters urged her colleagues to curb Trump’s crypto collusion before advancing any crypto legislation. Waters, who had been previously been negotiating legislation on risky stablecoin assets, said:
In one year, [Trump] has doubled his wealth through various crypto schemes and is using the power of the Presidency to make himself richer…This Committee voted to make Trump the King of Crypto by passing legislation that lets him corner the market on stablecoins, kick George Washington off the dollar, and make his own stablecoin U.S. legal tender. Instead of stopping this grift, you are enabling it.
At the same hearing, Alexandra Thornton of the Center for American Progress testified:
The Trump administration is already creating turmoil in the financial markets and weakening key financial regulators. Many items on the digital asset industry’s lengthy and ambitious wish lists from Congress and regulators would poorly regulate that industry, while jeopardizing investor and market protections in the existing securities markets by creating loopholes and end-runs around effective regulation of similar products and market actors. This will create even more risk and uncertainty in the financial system and the economy.
Hidden Road.
Ripple, a crypto exchange that recently settled with the SEC over the allegedly unregistered security offering of its XRP token, inked what it calls “one of the largest deals in the digital asset” sector with a $1.25 billion takeover of broker Hidden Road.
HOUSING
Flouting Fair Housing.
Bill Pulte, the Trump appointee who unilaterally crowned himself head of the government-sponsored mortgage corporations, fired 100 employees over what he suggests is “unethical conduct.” Earlier this month, Rep. Maxine Waters lambasted Pulte for his decisions to name himself chief, perform mass layoffs of staff, and dismantle offices dedicated to inclusivity and fairness: “You have broken the law.”
Meanwhile, the White House wants to make significant cuts to federal housing programs, including aid provided to low-income households.
Reinvesting in the Community… Or Not.
AFR’s Jessica Garcia argues that the Community Reinvestment Act, a provision meant to drive banks that receive federal subsidies to put money back into the communities they serve, sorely needs an update. And it would have gotten one, if not for the Trump administration’s intent to walk back a 2023 update that would have improved coverage for online banks, cut down on grade inflation and incorporate modern needs into the definition of community development.
Paid How Much?
Senate Republicans questioned why the Federal Home Loan Banks, a system of banks intended to make it easier for financial institutions across the country to lend money to homebuyers, pay their executives such high salaries. Last year, 31 executives at the FHLBs each earned over $1 million, with the 11 presidents raking in $2.3 million on average. The Consumer Federation of America likewise calls this excessive compensation a “wasteful and inefficient use of resources.”
Who’s in Housing?
In theory, the Federal Housing Finance Agency’s Suspended Counterparty Program list should provide an up-to-date roster of individuals and companies who have been responsible for fraud or financial misconduct, and who have been restricted from doing business with Fannie Mae, Freddie Mac and the FHLBs. But it hasn’t been updated since October 2024. Now, Pulte wants to revamp the Program; AFR hopes that any incoming proposal more strongly emphasizes multifamily and manufactured housing misconduct, but is concerned about the lack of details when it comes to due process.
Said AFR’s Caroline Nagy: “I could not tell you what fraud the [director] is referring to. I imagine his priorities might be different than mine…What kind of fraud are we seeing? What safeguards do you think the GSEs should implement to prevent this kind of fraud?”
Indeed, the Pulte has already levied a bogus mortgage fraud accusation against New York Attorney General Letitia James, in what some call a revenge campaign by the Trump administration for James’ success in a suit against Trump, his companies and his business network.
CLIMATE and FINANCE
Protecting People from Disaster.
The "Guide for Local and State Governments to Protect People Financially in the Lead-up and Aftermath of Climate Disasters," published by the Equitable & Just Insurance Initiative (EJII), offers a comprehensive framework for policymakers to safeguard communities against the escalating financial risks posed by climate-related disasters. Developed by Americans for Financial Reform Education Fund and Public Citizen, the guide emphasizes the necessity for proactive measures by local and state governments to shield renters, homeowners, and insurance policyholders from the compounding crises induced by climate events.
Central to the guide is the call for equitable disaster recovery strategies that provide affected individuals with the financial protections they need to avoid long-term financial harms, to access federal and insurance resources and rebuild in a more resilient fashion, and address systemic inequalities. It advocates for fair treatment for insurance policyholders, policies to prevent price gouging, predatory lending, and discriminatory retreat, and methods to hold the responsible parties financially accountable, including the fossil fuel industry and their financial backers..
POLITICS and MONEY
Republicans Profiting from Turmoil.
A recent analysis by government watchdog Accountable.US reveals that approximately 70% of Congressional Republicans stand to benefit personally from extending provisions of the 2017 Trump-Republican tax law. The report highlights how the pass-through deduction and increased estate tax threshold disproportionately favor wealthy individuals, including many lawmakers themselves. Notably, the ten wealthiest House Republicans are advocating for policies that could jeopardize Medicaid access for 1.7 million of their constituents. Additionally, while less than 1% of Americans are subject to the estate tax, 18% of House and 28% of Senate Republicans fall into this category, positioning them to gain significantly from proposed tax extensions.
Trump’s Billionaire Clique.
The Revolving Door Project is keeping up a resource, Billionaires in Trump World, compiling information about the 13 ultra-wealthy individuals that Trump has tapped to serve in his government. The list of oligarchs have a combined net worth of $600 billion, bringing together a laundry list of low-experience Wall Street actors.
A Warning from Warren.
Senate Banking has launched a Substack focused on “sounding the alarm on the Trump Administration’s dangerous efforts to destabilize the economy and policies to unrig the economy so it works for working families,” beginning with a post from Sen. Elizabeth Warren that calls for the restoration of consumer protections, stronger oversight over banks, and the preservation of the country’s social safety net.