Jamie Dimon, CEO of JPMorgan Chase, is leaving the US Capitol after a meeting with Republica members of the Committee on Bank, Living and City Affairs of the Senate, on Thursday, February 13, 2025, the question of the Debank's Debank.
Tom Williams | CQ-Roll Call, Inc. | Getty pictures
For years, American financial companies have fought in the courts and media against the consumer financial protection office – the chief monitor of US consumer financing – which the agency is illegitimate and as unfair players in the industry actors.
With the CFPB for life support, after the Trump administration issued a stop work command and closed its headquarters, the agency is with an unlikely ally: the same banks that reliably complain about their rules and enforcement measures under the former director Rohit Chopra.
This is because, if the Trump administration succeeds in reducing the CFPB to a shell of its former self, directly with non-bank finance actors, from Big Tech and FinTech companies to mortgage, car and numerous loans, who enjoy a much less state examination as a federal insured insurance.
“The CFPB is the only federal authority that monitors non -inviting institutions, so it would disappear,” said David Silberman, an experienced banking lawyer who stops at the Yale Law School. “Payment apps like PayPalStrip, Cash appYou would get this kind of things close to a free trip at the federal level. “
The postponement could throw the clock back to an environment before 2008, in which it was largely left to the state officials to prevent consumers from being demolished by non -banking providers. The CFPB was created after the 2008 financial crisis caused by irresponsible lending.
Since then, digital players have had significant implementation by offering banking services via mobile phone apps. FinTechs under the direction of PayPal and Chime had about as many new accounts as all large and regional banks together last year, according to Cornerstone advisors.
“If you are the big banks, you certainly don't want a world in which the non -banks have much more degrees of freedom and much less regulatory supervision than the banks,” said Silberman.
Keep the exams
The CFPB and its employees are in the floating after the incumbent director Russell Vought spent a flood of guidelines on the agency at that time. In cooperation with employees of the Department of Government Efficiency by Elon Musk, around 200 employees were quickly interpreted, according to measures to terminate the agency's construction contract and canceled the tons of contracts that were necessary for legally required obligations.
In internal e -mails published on Friday, CFPB -Chief Operating Officer Adam Martinez has detailed plans for the removal of around 800 supervisory and enforcement workers.
CFPB leaders have shared plans for more layoffs that the agency would leave with only five employees, reported CNBC. That would kneel the agency's ability to carry out its supervisory and asserting tasks.
This seems to go beyond what even the consumer banker association, a frequent CFPB critic, want. The CBA, which represents the largest retail banks in the country, sued CFPB last year to postpone the regulations of overdraft and credit card. The role of CFPB has recently been determined when maintaining a flat competition area among the market participants.
“We believe that a new leadership understands the need for exams for large banks, in view of the intersections with regulatory exams,” said Lindsey Johnson, President of the CBA, in a statement that was presented. “It is important that the CFPB is the only examiner of non-banking financial institutions.”
The plans of Vougge to limp the agency were stopped by a federal judge who is now considering the merits of a lawsuit, which was submitted by a CFPB union who asks for an interim decision.
A hearing in which Martinez should testify is set for Monday.
'Good luck'
In the meantime, bank managers from CFPB antagonists are among those affected who will disappear.
At a Bankers Convention in New York at the end of October, JPmorgan Chase CEO Jamie Dimon encouraged his colleagues to defend himself against the supervisory authorities. A few months earlier, the bank said that CFPB could sue it for its examination of the peer-to-peer payment network cell.
“We sue our supervisory authorities over and over again because things are unfair and unfair and they hurt, many of these rules violate lower people,” said Dimon at the congress.
Now there is a growing consensus that a first pressure to “delete” the CFPB is an error. In addition to increasing the threat from non -benches, the current rules from the CFPB would still be in the books, but there would be no one to update them while the industry is developing.
Small banks and credit cooperatives would be even more disadvantaged than their larger colleagues if the CFPB disappeared, industry representatives say that they were never regulated by the agency and would be confronted with the same regulatory exam as before.
“Conventional wisdom is not correct that banks just want the CFPB to disappear, or that the banks want to consolidate the regulatory authorities,” said an executive of a large US bank that refused to talk about the Trump administration. “You want thoughtful guidelines that support economic growth and maintain security and solidity.”
A high -ranking lawyer of CFPB, who has lost his position in the past few weeks, said that the orientation of the industry with the Republicans may have backfired.
“You are about to live in a world in which the entire non-banking finance service industry is not regulated every day while monitoring the Federal Reserve, FDIC and OCC,” said the lawyer. “It's a world in which ApplePayPal, cash app and X, run wild for four years. Good luck.”
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