CFPB is Unplugged and the People Fight Back

By the time you read this newsletter, events at the Consumer Financial Protection Bureau might very well have overtaken what we’re able to provide. But here goes:

By Thursday evening, Elon Musk’s DOGE team entered the CFPB building on 17th Street, NW in Washington, D.C., and set to its malicious work.

After Acting CFPB Director Scott Bessent handed the agency off to newly confirmed OMB Director Russell Vought on Friday, the latter shut down of supervision and oversight by the CFPB, allowing all manner of financial companies, from Wall Street megabanks to payday lenders to financial technology firms to credit bureaus to rip people off and mistreat their customers at will.

In response, CFPB employees rallied, demanding on Saturday, at a demonstration in front of HQ, to be allowed to do their jobs protecting consumers from abuse. And on Monday, the National Treasury Employees Union filed two lawsuits aimed at stopping the destruction of the CFPB.

And then, later in the day, Rep. Waters and Sen. Warren headlined a demonstration in the same spot with a dozen lawmakers and hundreds of people. The message:

Stop Elon’s Billionaire Grift: Hands off the CFPB - (Watch it here on YouTube)

In his first 24 hours after becoming acting CFPB director, Vought gave Elon Musk’s team a free hand to access sensitive data and begin to tear apart the CFPB, an agency whose mission is immensely popular with the public and has saved families $21 billion over the past 14 years. On Sunday, he declared the CFPB staff would work remotely; then on Monday he said they would not work at all.

Vought has now made blatantly illegal moves to cut off its funding and cease complying with the statutory requirements under the 2010 Dodd-Frank law to enforce consumer protection laws.

(Musk will also personally benefit from this shutdown as he launches a payments system on his social media platform X/Twitter in partnership with Visa.) It has also taken steps to supervise these platforms. Said Christine Chen Zinner, consumer policy counsel at Americans for Financial Reform:

The CFPB was created to keep a watchful eye on the consumer financial services marketplace. Vought is now giving all sorts of financial companies a green light to defraud and gouge their customers. Every corporate bad actor in finance now has a free pass from the Trump administration to make life more expensive and less fair for families all over the country.

The suspension of supervision is also a giant gift to the largest banks, such as JPMorgan Chase, Bank of America, and Wells Fargo, which will see supervision and enforcement of consumer protection rules evaporate. Because the CFPB only supervises banks with over $10 billion in assets, those megabanks will get a free hand, while much smaller community banks would continue to face oversight from state regulators and the FDIC. Said AFR’s Patrick Woodall:

Stopping supervisory work by the CFPB will allow the more powerful and sophisticated Wall Street banks to swindle their more numerous customers without fear of enforcement. Vought’s action also shields Elon Musk’s latest venture from scrutiny, allowing him to launch his new payment platform and treat users any way he wants without any oversight from the CFPB.

By Monday, Mark Paoletta, a longtime lackey of Supreme Court Justice Clarence Thomas, had been installed as chief legal officer at the CFPB. And the DOGE bros are in a basement conference room, the windows blacked out.

Stay tuned.

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BANKING AND FINANCIAL STABILITY: Cooking the Books for Nine Years – The Next Banking Crisis? – Wells Unchained? – Whistleblowers
CONSUMER: Credit Card Rates – Credit Union Overdraft – Remiss Remittances
CAPITAL MARKETS: Probes
PRIVATE MARKETS: Private Equity and a Child’s Death – Evicting Seniors – Pensions Want PE Info – Who Has the Power? – Fuel on the Fire
CRYPTO: The Presidential Memecoin – Crypto Bros, Deregulation, and “Debanking” – The Crypto Bubble – Crypto Bills Coming – Spending Taxes on Bitcoin?
HOUSING: How’s HUD? – Renters – RealPage
CLIMATE AND FINANCE: When Waters Rise – Behind the Curtain – Going in Reverse

Feedback? Reach us at afrnews@ourfinancialsecurity.org

BANKING AND FINANCIAL STABILITY

Cooking the Books for Nine Years.

A whistleblower exposed JPMorgan, the largest American bank, for allegedly breaking global financial rules put in place in the wake of the ‘08 crisis. And other banks have apparently been doing the same.

According to a document obtained by Bureau of Investigative Journalism and International Consortium of Investigative Journalists, JPMorgan had allegedly been misreporting its trading activity, potentially inflating its earnings metrics and artificially boosting how much its executives were paid, since the Federal Reserve adopted rules requiring large banks to submit trading data in 2016. The underreporting meant that, in a single year, JPMorgan could pad its income by more than $2 billion. It also allowed it to have a lower capital ratio than required, weakening the bank’s shield against financial system shocks. Other major banks were doing the same “with tacit approval from the Federal Reserve,” reports the BIJ and ICIJ.

The Next Banking Crisis?

Having replaced former Federal Insurance Deposit Corporation (FDIC) Chairman Martin Gruenberg with Travis Hill, who has already expressed his intent to move the agency away from numerous financial safety initiatives, President Trump issued a federal hiring freeze, forcing the regulator to rescind over 200 jobs from incoming bank examiners. The Revolving Door Project warns that the loss of these civil servants, who monitor banks for risk, will “enabl[e] financial predators to feast without even the pretense of adequate oversight.”

Meanwhile, Hill has indicated that the FDIC plans to make changes to the bank merger approval process – which requires assessing for stability risk, competition, regulatory compliance, and more. Just four days after taking the position, his agency minted WesBanco, Inc., a merger between an Ohio bank and a West Virginia bank that will operate in seven states.

Wells Unchained?

Seven years ago, the Federal Reserve gave Wells Fargo the banking equivalent of a parking boot: a cap to keep it from growing beyond $1.95 trillion in assets. It was a penalty imposed for a string of serious anti-consumer offenses, not the least of which was when it surfaced that the bank had opened millions of bogus accounts for customers without their consent. Some estimates suggest that it has kept $36 billion in more profit out of the hands of a bank that just last year raked in $125 billion.

Execs hoped to get the Fed to lift the cap this year. It didn’t, though the central bank did lift other mortgage-related enforcement actions levied against the bank.

Whistleblowers.

Democrats on House Financial Services re-launched a webpage where whistleblowers can alert committee members to any “unlawful activity, mismanagement, waste of funds, or abuse of authority in your federal agency or other organization,” following what they call a “series of illegal and unconstitutional executive orders” signed by President Trump last month. Senate Democrats have a similar portal.

CONSUMER

Credit Card Rates.

Republican Sen. Josh Hawley and Independent Sen. Bernie Sanders introduced a bill to limit credit card interest rates to 10 percent for five years, slashing the current average rate (a little over 28 percent) by more than half.

Credit Union Overdraft.

When the CFPB finalized sweeping protections to limit how much consumers would have to pay in overdraft fees, the industry scrambled fairly quickly to sue the agency over a move that would save people $5 billion a year. Now that Republicans have a trifecta on the Hill, banks have more conservative allies who have since moved to overturn the rule, which advocates like AFR warn would overwhelmingly benefit banks at the expense of everyday people. Said AFREF’s Christine Zinner:

Overdraft fees cost people a lot of money and are the top reason people lose access to bank accounts, so Republican leaders are only doing favors for big banks if they seek to overturn this rule. Instead of working overtime to push the bank lobby’s agenda, the committee should side with everyday people to keep this overdraft junk fee rule in place.

AFR joined 200 other organizations across the country in urging against repealing the rule, calling on Congress to “stand with everyday people over big banks.”

And AFR’s Amanda N. Jackson: “Rolling back the rule would disrupt safeguards and protections for communities of color and everyone that need and deserve safeguarding from the fee-gouging whims of the financial services industry.”

In the credit union world: The National Credit Union Administration (NCUA) finds that higher overdraft or nonsufficient funds (NSF) fees don’t translate into savings or cost-cutting measures for consumers elsewhere. Credit unions don’t typically use the fees to offer cheaper services or to “subsidize” better interest rates. Perhaps they’re devoting the excess funds to important things… like naming stadiums? But not all: one Michigan credit union, LACFU, recently cut its fees to just $0.99.

Remiss Remittances.

The CFPB will require the international remittance company Wise, which allows people to wire money to friends and family across the world, to pay $2.5 million for misleading their customers and failing to provide the necessary disclosures. The agency discovered the company had falsely advertised various perks, such as lower ATM fees and free withdrawals, to customers from the United States, to whom the benefits would not apply. The company also allegedly failed to disclose fees. And when customers’ funds didn’t arrive on time, Wise didn’t refund the remittance fees in a timely manner.

CAPITAL MARKETS

Probes.

Last month, Trump appointed the Republican commissioner Mark Uyeda, a longtime critic of Gary Gensler’s approach to rulemaking and enforcement, to head up the Securities and Exchange Commission (SEC). This week, Uyeda announced his executive staff members. Already, with Republicans at the helm, the agency will require its enforcement lawyers to receive approval from the commission before formally initiating probes into possible bad actors.

PRIVATE MARKETS

Private Equity and a Child’s Death.

A toddler died in a fire at a private equity-owned apartment building that was without heat and infested by rodents. It took journalists a week to figure out who actually owned the property: Vitus, an investment company (whose website has mysteriously entered maintenance mode) that claims to own over 130 low-income properties across the country. Analysis by AFR uncovered at least 20 shell companies operated by Vitus nationwide.

Said AFR’s Caroline Nagy:

Bad actors hide behind shell companies and LLCs to avoid accountability for their misdeeds…When we allow private equity firms and other corporate landlords to avoid accountability by hiding under shell companies we are making a deliberate policy choice that allows them to act with impunity while tenants are kept in the dark.

Evicting Seniors.

A retirement community in Long Island, New York, wants to sell to private equity firm Focus Healthcare Partners, the owner of around 15 other facilities across the country, for $80 million. The transaction would mean evicting dozens of senior residents in their memory-care and assisted-living units. And current and former residents who were promised $130 million in entrance fee refunds might not get what they’re owed.

Pensions Want PE Info.

Pension funds, the investment vehicles funded by public workers’ pooled money, have long invested in private equity, promised gains that are eventually eaten into by PE management fees. One issue, among all the others inherent in private equity investment, is just how private the firms can be when it comes to just how much they’re skimming off the top of also unknown returns. Late last month, the Institutional Limited Partners Association, a trade group representing various retirement plans, proposed new guidelines to require standardized disclosures from PE.

Who Has the Power?

Often, when PE makes an acquisition, the terms of the deal include piling tons of debt onto the company it’s snapping up. Lately, some of the largest firms, like Blackstone, have included new clauses into debt documents to clamp down on creditors’ voting rights and cooperation agreements – which allow creditors to negotiate collectively during restructuring – in an effort to maintain more power over their companies when they (inevitably) experience financial distress.

Meanwhile: High interest rates and a pullback in consumer spending are putting the pressure on debt-burdened companies backed by PE, driving a record wave of bankruptcies.

Fuel on the Fire.

The fires that ripped through Los Angeles in January were two of the most destructive in the state’s history and could well have been the costliest. Private equity appears to have made it worse. The cost to manufacture a fire engine has shot up, due in part to private equity firm American Industrial Partners. AIP has spent the past several years pursuing consolidation in the fire truck industry and gouging prices, meaning places that needed trucks to replace aging, dilapidated fleets couldn’t get any without shelling out millions.

CRYPTO

The Presidential Memecoin.

The Trump family made an estimated $100 million in trading fees from hawking their memecoin, $TRUMP. Over 810,000 people registered losses from holding onto the coins or from selling at a loss, losing a cumulative $2 billion.

Crypto Bros, Deregulation and “Debanking.”

No matter how much crypto execs might try to tell you otherwise, bank regulators didn’t “go after” crypto unfairly. After a $2 trillion implosion of crypto markets in 2022, bank regulators acted to keep the rest of the financial system shielded from the fallout. AFR said as much in a statement for the record challenging the idea, which it calls a “red herring to obscure the real risks from reckless speculation, egregious self-dealing, or illegal and harmful financial transactions by the companies that complain.”

The Crypto Bubble.

The crypto bubble is getting bigger and even more unstable, and even some on Wall Street are worried. The hedge fund Elliot Management warned that the White House is supporting crypto in a way that “could wreak havoc” in “profoundly dangerous” ways.

Crypto Bills Coming.

Despite this, industry allies on the Hill are eager to push bills through a friendly Congress. Sens. Hagerty, Gillibrand and Scott have already teed up a bill that purports to create a regulatory framework for digital assets, particularly dollar-pegged stablecoins. The new legislation is a version of H.R. 4766, a bill introduced last Congress, which AFR argued would create a regulatory pathway too permissive for (usually unstable) stablecoins and heighten risks to consumers and the broader financial system. Republicans appear to be moving in lock-step with each other, as Senate Banking Chair Sen. Scott hopes to get this bill and others out the door in the first 100 days.

Spending Taxes on Bitcoin?

The Satoshi Action Fund (SAF), a crypto advocacy organization that is astroturfed by fossil fuel executives, wants the government to create a Bitcoin stockpile. Some state legislatures are buying into the Bitcoin bunk, propped up by groups connected to Koch Network and the Heritage Foundation – the same Heritage Foundation that created Project 2025. Said AFR’s Mark Hays: “It’s yet another crypto solution in search of a problem. It brings state institutions, which are inevitably taxpayer-funded, closer to the risk inherent in these markets.”

HOUSING

How’s HUD?

If Trump has his way, probably worse off. The second-term president wants to cut the budget of the U.S. Department of Housing and Urban Development (HUD), the agency that oversees investment in affordable housing, by up 15 to 18 percent.

Renters.

The CFPB found financial distress increasing among renter households, as growing balances and increasing proportions of tenants paying out late fees point to significant burdens that aren’t easing up.

RealPage.

A group of Democrats and one Independent in the Senate called for an investigation into RealPage, the private equity-backed company that operated the Yieldstar algorithm and allowed a cartel of corporate landlords to gouge rents. The lawmakers allege that the company hiked rents for military families and drained the U.S. military’s money.

CLIMATE and FINANCE

When Waters Rise.

An analysis by Politico determined that a quarter of all large metro areas face both housing shortages and flood risks, two climate-intensified problems that together leave communities especially vulnerable. Insurers, meanwhile, have only made the crisis worse by underpaying claims and cancelling policies with little warning, while continuing to invest in fossil fuel expansion that drives further climate change.

Across the board, climate change is expected to diminish U.S. home values by nearly $1.5 trillion over the next thirty years.

A glimmer of hope: Dozens of consumer protection, community development, environmental, climate, and racial justice advocates have joined together to form the Equitable & Just Insurance Initiative, a coalition seeking to guide community leaders and policy advocates toward ways to address the climate-driven insurance crisis. Said AFR’s Moonyoung Ko:

The Equitable & Just Insurance Initiative is an effort to reshape, reimagine, and lay out the blueprint of the world that we want to live in by working alongside experts and community groups to develop tangible solutions that address the profit-driven nature of insurance companies that delay, deny, and withdraw working people’s coverage because of climate change-driven extreme weather events while simultaneously financing and profiting off of fossil fuels.

Behind the Curtain.

AFR, Global Energy Monitor and the Private Equity Stakeholder Project – together, the Private Equity Climate Risks project – unveiled an update to its public database of the energy holdings of 20 of the world’s largest private equity firms, the Private Equity Energy Tracker, bringing into focus the latest state of private equity investments in the energy sector. As of January 2025, 20 private equity firms were invested in at least 264 fossil fuel companies out of 407 energy portfolio companies overall, over half of the group’s overall energy holdings. Three firms in particular – Quantum Capital Group, Warburg Pincus and Kayne Anderson – concentrated over 90 percent of their respective portfolios in dirty assets.

Said AFREF’s Dustin Duong:

Whenever we take a closer look at the private equity industry and its investments, we see how the industry is standing in the way of a just transition and the need to pivot to solutions to stave off climate catastrophe…Until private equity firms stop supporting polluting industries, their claim of protecting communities, especially communities of color and low-income neighborhoods, will ring hollow.”

Going in Reverse.

Amid the crisis, the Treasury has followed in the footsteps of the Fed and FDIC by leaving the Network of Central Banks and Supervisors for Greening the Financial System, a group of international regulators and central banks that sought to study the financial risks of climate change.