Why banks don’t want the agency to disappear

For years, US financial companies have fought the Consumer Financial Protection Bureau – the main guard of American consumer finances – in the courts and the media, depicting the agency as illegitimate and unjustly targeting industry players.

Now, with the CFPB on the support of life after the Trump administration has published a working order and has closed its headquarters, the agency is with an unlikely ally: the same banks that have complained reliably with its rules and actions to apply the law under former director Rohit Chopra.

Indeed, if the Trump administration succeeds in reducing the CFPB to a shell of its former self, the banks would find themselves directly in competition directly with non -banking financial actors, major technologies and fintech companies to mortgage, auto and salary lenders, who enjoy much less federal examination than FDIC institutions.

“The CFPB is the only federal agency that oversees non -depository institutions, which would disappear,” said David Silberman, a veteran lawyer who gives conferences to the Yale Law School. “Payment applications such as PaypalStripe, Cash applicationThese kinds of things, they would get closer to a free journey at the federal level. “”

The quarter of work could cover the stopwatch to an environment before 2008, where it was largely left to state officials to prevent consumers from being scammed by non -banking suppliers. The CFPB was created following the 2008 financial crisis which was caused by irresponsible loans.

But since then, digital players have made significant breakthroughs by offering banking services via mobile telephony applications. The fintechs led by Paypal and Carith had about as many new accounts last year as all the major combined regional banks, according to data from Cornerstone Advisors.

“If you are the big banks, you certainly do not want a world in which non-banks have much greater degrees of freedom and much less regulatory surveillance than banks,” said Silberman.

The CFPB and its employees are in the limbo after the acting director Russell Vought resumed last month, issuing a burst of directives to the 1,700 agency staff. In collaboration with agents of the Elon Musk Government Ministry, Vought quickly dismissed around 200 workers, would have taken measures to end the agency’s building lease and canceled the trains of contracts required for the jugally mandated tasks.

In internal email published Friday, the chief of the CFPB operation, Adam Martinez, detailed plans to delete around 800 supervision and application workers.

The CFPB senior executives shared plans for more layoffs that would leave the agency with only five employees, CNBC reported. This will make the agency ‘ability to exercise its supervision and application tasks.

It seems to go beyond the fact that even the consumer Bankers Association, a frequent CFPB criticism, would like. The ACB, which represents the largest retail banks in the country, continued the CFPB in the past year to scuttle rules limiting overdraft and credit card costs. More recently, he noted the role of the CFPB in maintaining a level field among market players.

“We believe that the new leadership includes the need for exams for large banks to continue, given the intersections with prudential regulatory exams,” said Lindsey Johnson, president of the ABC, in a statement provided to CNBC. “Above all, the CFPB is the only examiner for non -banking financial institutions.”

Vought’s plans to hinder the agency were interrupted by a federal judge, who now envisages the merits of a trial brought by a CFPB union requesting a preliminary injunction.

A hearing where Martinez must testify is scheduled for Monday.

In the meantime, the leaders of the bank have gone from CFPB antagonists to those concerned by the people concerned.

During a banker agreement at the end of October in New York, the CEO of Jpmorgan Chase, Jamie Dimon, encouraged his peers to “retaliate” against regulators. A few months before that, the bank said that it could continue the CFPB during its investigation into the Peer Zelle payments.

“We continue our regulators repeatedly because things become unfair and unfair, and they injure companies, many of these rules harm less well -paid individuals,” said Dimon during the Convention.

Now there is an increasing consensus according to which a first push to “delete” the CFPB is a mistake. In addition to increasing the threat posed of non-banks, the current CFPB rules are still on books, but no one would be there to update them as the industry evolves.

Small banks and credit cooperatives would be even more disadvantaged than their greatest peers if the CFPB leaves, according to the defenders of the industry, because they have never been regulated by the agency and will face the same regulatory examination as before.

“Conventional wisdom is not fair that banks simply want the CFPB to disappear, or that banks wish to consolidate the regulator,” said a large American bank that refused to be identified by the Trump administration. “They want reflected policies that will support economic growth and maintain security and solidity.”

A CFPB’s main lawyer who has lost his post in recent weeks has said that the alignment of the industry with the Republicans could have turned against him.

“They are about to live in a world in which the entire non -banking financial services industry is not regulated every day, when they are supervised by the Federal Reserve, the FDIC and the WOT,” said the lawyer. “It’s a world where ApplePaypal, Cash App and X Run Wild for four years. Good luck.”