For years, big banks and the financial industry have fought against the Consumer Financial Protection Bureau, arguing that its regulations were too aggressive. But now that the Trump administration is actively trying to dismantle the agency, banks have found themselves in an unexpected position—it seems they actually want to keep the CFPB around.
Why Banks Are Suddenly Defending the CFPB
Despite past criticism, banks are realizing that getting rid of the CFPB would result in a major advantage for their competitors—financial technology companies and other firms outside the traditional banking system like PayPal PYPL, Stripe, Cash App, and X. Without the CFPB overseeing them, these companies could expand their financial services with little to no federal scrutiny, unlike Federal Deposit Insurance Corporation-backed institutions, which remain heavily regulated.
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“The CFPB is the only federal agency that supervises non-depository institutions, so that would go away,” banking attorney David Silberman told CNBC. “Payment apps like PayPal, Stripe, Cash App—those sorts of things, they would get close to a free ride at the federal level.”
According to CNBC, an unnamed senior CFPB lawyer put it even more bluntly, warning that if the agency disappears, “They’re about to live in a world in which the entire nonbank financial services industry is unregulated every day, while they are overseen by the Federal Reserve, Federal Deposit Insurance Corporation, and [Office of the Comptroller of the Currency]. It’s a world where Apple, PayPal, Cash App, and X run wild for four years. Good luck.”
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Whistleblower Testifies CFPB Shutdown Is Still Moving Forward
While the Trump administration has claimed that efforts to dismantle the CFPB have slowed, a whistleblower recently testified in court that the plan remains very much alive. Testifying under the pseudonym “Alex Doe” to avoid retaliation, the CFPB employee revealed that plans for mass layoffs and office closures were still in motion.
Elon Musk’s Push to ‘Delete CFPB’
The push to dismantle the CFPB has gained support from influential figures, including Elon Musk. In November, Musk posted on X, “Delete CFPB,” arguing that there are too many overlapping regulatory agencies.
Delete CFPB. There are too many duplicative regulatory agencies.
— Elon Musk (@elonmusk) November 27, 2024
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Musk’s statement came shortly after the CFPB announced new rules expanding its oversight of big tech firms offering payment services—an area X is actively exploring. X Payments has already obtained licenses in multiple states, signaling Musk’s ambitions in the financial sector.
Critics argue that Musk’s call to abolish the CFPB is self-serving. Robert Weissman of Public Citizen called it “intolerable corruption,” pointing out that Musk has a direct financial interest in reducing regulation on digital payments.
“Asking the world’s richest person, with a direct interest in a wide range of business lines, to run a project to review the federal government’s overall operations is absurd and fundamentally corrupt — and this issue highlights exactly why,” Weissman said in a statement.
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What Happens Next?
A federal judge is now weighing a lawsuit brought by a CFPB employees’ union to block further layoffs and preserve the agency’s operations. Judge Amy Berman Jackson has expressed concerns over conflicting testimonies and said she wants to keep the agency intact in case it needs to be revived.
While the future of the CFPB remains uncertain, one thing is apparent—banks may have spent years fighting the agency, but they’re starting to realize that without it, their biggest competitors could gain an unchecked advantage. And with giants like Cash App, X and others ready to expand, banks might just need the CFPB more than they ever expected.
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