The Best Government Agency You’ve Never Heard Of
How a Trump victory would gut the CFPB and Biden's legacy of consumer protections.
What will happen if Donald Trump wins in November?
Naturally, much of the focus has been on his authoritarian impulses, his hunger to wield the Justice Department to punish his enemies. Some liberals fear democracy will crumble altogether. I’m not convinced this will be the case—the American republic is 248 years-old and more durable than it sometimes looks—but it’s worth thinking hard on what concrete policy changes Trump might make.
And much of that damage may occur away from the headlines, towards gutting agencies that most Americans haven’t heard of but that deserve credit for significant improvements in regular people’s lives. The Consumer Financial Protection Bureau (CFPB)—an unsexy, unheralded, but highly-effective agency—is exactly the sort of institution that will almost certainly find itself in Trump’s crosshairs.
A product of the Dodd-Frank reforms in the wake of the 2008 financial crash, the CFPB was envisioned during the Obama administration as the attentive cop on the consumer beat. During his term, Trump defanged it, rarely pursuing enforcement measures against financial institutions and handing out paltry fines. Under Biden, the CFPB has gotten very close to its original mandate, placing banks, payday lenders, and securities firms under heightened scrutiny.
The CFPB may be thought of as the forgotten step-sibling of the better-known Federal Trade Commission (FTC). Under chair Lina Khan, the FTC has reintroduced antitrust enforcement to American politics, challenging tech giants and corporate conglomerates alike—most famously, by banning employee non-compete clauses and launching a high-profile lawsuit against Amazon. The FTC’s actions are of a piece with other somewhat-under-the-radar people-first reforms initiated by the Biden administration, including the Department of Transportation’s forcing airlines to issue immediate refunds for canceled flights. And that approach is encapsulated in the CFPB and its deceptively low-key director Rohit Chopra.
So what could Trump undo? He could start with a new proposed rule from the CFPB that would remove medical bills from credit reports. The CFPB is trying to stop debt collectors harassing Americans into paying medical bills they might not even owe. Creditors, under the rule, couldn’t rely on data that is potentially inaccurate and not necessarily predictive of future repayment.
Medical debt, in general, has become the new remit of the Biden-era CFPB. In the last two years, the CFPB has penalized medical debt collectors, issued warnings to healthcare providers and lenders that target patients, and published reporting on how the healthcare system is crippling the finances of ordinary Americans.
Under Chopra, the CFPB has also attempted to more aggressively regulate banks and crack down on junk fees. A rule regulating overdraft fees could be in danger if Trump wins in November. As of now, the rule is in the proposal stage: the CFPB would close a loophole that exempts overdraft lending services from existing consumer financial protection laws. For decades, the largest financial institutions have been able to issue highly-profitable overdraft loans, but, under the CFPB’s proposal, large banks could extend overdraft loans only if they disclose any applicable interest rates. These institutions typically charge $35 for an overdraft loan; the CFPB is proposing much lower benchmarks of $3, $6, $7, or $14.
Last year, the CFPB released guidance that tells large banks they can no longer charge fees for basic customer service requests. A 2010 federal law requires large banks and credit unions to provide complete and accurate information when requested, but these institutions have been charging fees when customers try to find out, for example, which companies hold their loans as they are trying to pay their mortgages. Since this is not a rule, merely guidance, Trump could easily reverse it if he takes office next year.
Finally, to some greater fanfare, the CFPB has been targeting credit card companies. In March, Chopra finalized rules that would place an $8 cap on credit card late fees. When the rule is implemented, consumers could save $10 billion per year on reduced late fees. Previously, all of that was profits for the banks. (This rule came in addition to another announcement that the CFPB made to rein in manipulated comparison shopping results for credit cards.)
Republicans in Congress have been battling the rule. Tim Scott, the South Carolina senator who remains on Trump’s shortlist for vice president, has introduced a resolution to kill the late fee rule, and he’s backed by the credit card companies and the U.S. Chamber of Commerce. The fact that Scott, despite his deep fiscal conservatism, has remained in Trump’s orbit is evidence that Trump has no interest in Biden’s style of consumer protections, however much they may benefit ordinary Americans. The good news is that the Democrat-controlled Senate ensures Scott’s vote is doomed.
Of course, that might not be the case come 2025. A Trump victory could place Scott in the White House or, if he chooses a different running mate, leave the South Carolina Republican in the Senate, where he’d chair the Banking Committee. If Scott and his colleagues want to furiously defend large conglomerates and credit card companies in Congress, Trump is not going to stop them. He will obsess over immigration and tariffs and leave the rest of governing, perhaps, to the U.S. Chamber of Commerce. This is not fascism and not the sort of apocalyptic scenario that gets routinely floated in liberal media; it’s just a very lousy development for working class Americans.
Ross Barkan is a novelist and journalist. His next novel, Glass Century, will be published next year and he’s working on a book for Verso about the contemporary political situation. His Substack is Political Currents.
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My wife is a financial counselor. It is truly heartbreaking the amount of nuisance fees low earners pay on credit card and banking fees, not to mention the usury of pay day loans. These fees and extortionate interest rates can be so onerous that families find themselves unable to pay for heat or electricity and sometimes will lose their homes because the aggressive collections practices convince them to pay credit cards rather than their mortgage. I doubt many of us here who are wealthy enough pay for this publication have any concept of the degree the poor are, well, screwed by the banks and the credit card companies.
I was surprised to read such a pro-Trump article on Persuasion.
Seriously, promoting the idea that every ill-conceived--or reasonably contested--new regulation is a necessarily permanent part of the liberal order undermines what I thought was the purpose of this publication.