By Douglas Gillison
WASHINGTON, Dec 30 (Reuters) – When Bianca Jones, a 33-year-old special education teacher in Memphis, Tenn., decided a few years ago that she wanted to buy a home, she started poring over her Experian credit report. She was shocked by what she found.
Her student debt had been counted twice, making it appear as if she owed a quarter of a million dollars and foreclosed on the property. Jones disputed the articles with Experian, one of the major credit reporting agencies, several times in writing and on the phone, but got nowhere.
“They kept saying it was checked, it was checked … They never investigated. They never tried to remove him,” Jones said in an interview.
Jones eventually complained to the Consumer Financial Protection Bureau, a federal watchdog created by Congress in 2010 to protect consumers in their financial dealings, helping lawyers show the judge how much he had done to mitigate the damage to his credit, according to his lawyers, legal filings and a copy of the complaint. That paper trail eventually helped Jones successfully sue Experian to correct her record.
Jones closed on a home in the Memphis suburb of Millington for $300,000 in January.
“If I didn’t have this agency to go to, I don’t think I’d be in the house right now,” Jones said. “It actually changed my life.”
Experian and the CFPB did not respond to a request for comment on Jones’ case.
THE AGENCY IS FACING CLOSURE
In interviews, consumers who have fallen on hard times or experienced hardship, attorneys who work with the poor and credit counselors told Reuters that the CFPB has been a lifeline for people in trouble, and they feared that without it, many consumers would be left unprotected from financial predators.
Conceived by Sen. Elizabeth Warren to rein in the kind of lending that fueled the 2008 financial crisis, the CFPB has long been a target of conservatives and industry. Congress created the agency as part of post-crash reforms in 2010 as the only federal body charged primarily with protecting consumer rights in the financial market.
The CFPB now faces extinction under the second administration of President Donald Trump, who says the agency is a political weapon for Democrats and a burden on free enterprise.
Speaking to reporters at the White House in February, Trump said it was “very important to get rid of the agency,” claiming, without elaborating on evidence, that Warren “used it as a little personal agency to destroy people.”
In an interview, Warren dismissed the criticism as a sign that the CFPB is doing its job. “It’s not about vendettas. It’s about enforcing the law as it’s written so billionaires and billionaire corporations don’t cheat American families. I think that’s a pretty good thing,” she said.
White House Budget Director Russell Vought, a staunch critic of the CFPB and the agency’s acting head, told “The Charlie Kirk Show” podcast in October that he plans to shut down the CFPB. The administration is fighting in court to lay off up to 90 percent of its workers as it plans to move pending investigations and litigation to the Justice Department.
The agency says it is set to run out of money in early 2026, and Vought says it cannot legally seek more until the Federal Reserve returns to what the administration considers “profitability,” a position experts dispute. Congressional Republicans also cut the CFPB’s maximum allowable funding in July.
Together, the administration, congressional Republicans and industry-backed lawsuits have overturned a decade of CFPB rules on matters ranging from medical debt and student loans to credit card late fees, overdraft fees and mortgage lending.
The agency also dropped or discontinued investigations and enforcement actions and stopped overseeing the consumer finance industries, leading to a number of resignations.
The CFPB and the White House did not respond to requests for comment.
Warren said that as a law professor studying bankruptcy, he saw that consumer protections were weak and fragmented and that America needed a single federal agency dedicated to protecting consumers from unfair, deceptive and abusive practices.
“I was amazed at the number of people with financial problems who lost their jobs or got sick, but who were also defrauded by one or more of their creditors,” she told Reuters. “For no agency consumer protection was a top priority, it was somewhere between fifth and tenth, which meant there was no drunken cop. If the CFPB isn’t there, people have nowhere to turn when they’re scammed.”
CRITICS COMPLAIN OF OVERCOME
Republicans have said the agency is redundant, with federal bank watchdogs such as the Office of the Comptroller of the Federal Deposit Insurance Corporation and state regulators already targeting consumers, and that its funding and management structure are unconstitutional. Like other banking regulators, the CFPB’s funding is not set annually by Congress and does not come directly from taxpayers. Rather, the agency relies on the Federal Reserve, and its director has until recently been protected from removal at will by the president.
Republicans have accused the CFPB’s first director, Richard Cordray, a Democrat, of using those powers to crush banks and small businesses through excessive enforcement and complex regulations, and of overstepping the agency’s legal authority by trying to regulate businesses that Congress exempted from its oversight, such as car dealerships.
Conservative and industry groups have repeatedly tried to curtail its powers or shut it down entirely through the courts. In 2020, the Supreme Court handed the president the power to dismiss the director, which he has used ever since. Critics on the political right accused former director Rohit Chopra, a Democrat, of overstepping his authority, flouting the federal rulemaking process and harming consumers with an ill-conceived crackdown on financial firm fees.
Thomas Hoenig, who served as FDIC vice chairman from 2012 to 2018, said he was skeptical of some of the CFPB’s activities under previous administrations, but that it still served an important purpose.
“If you take them out of the picture altogether, you’re going to get more abuse, not less,” he said. “I’m disappointed to see the CFPB just disappear.”
“VERY IMPORTANT TO ME”
For some, however, the agency was a lifeline. Millions of Americans like Jones, who face credit reporting errors, predatory lenders, debt collectors, fraud, discrimination or other challenges, now file complaints each year with the agency, which urges companies to fix the problems, sometimes by paying the complainants or explaining themselves.
When companies repeatedly break the rules, the CFPB punishes them and tries to get their customers on board. To date, it has returned $21 billion to consumers, according to CFPB data.
Morgan Smith, a 31-year-old single mother and social service worker in Issaquah, Washington, turned to these resources when she realized she was a victim of identity theft.
After her wallet and ID were stolen from her car, she learned someone had opened a string of accounts in her name, she said: a rental car that got into an accident, an unpaid storage unit and a hotel room at an amusement park. Reuters could not independently confirm Smith’s account.
“I went directly to the CFPB and was navigated there to their consumer education tab where I was able to learn how to deal with fraud and scams. It gave me all the information I needed to know … my rights,” she said.
“It was very important for me to have this resource.”
Without the CFPB, borrowers would once again rely on a mix of federal, state and local agencies that lack the CFPB’s resources, expertise and legal skills, consumer groups say.
“Before the CFPB came along, we would have to say ‘write your attorney general, write the FTC,’ whoever it was, and it became this kind of letter-writing campaign,” said Sam Hohman, who runs the nonprofit Nebraska Credit Advisors Foundation, which helps people get out of debt and provides consumer education services.
As a result, people like Virginia resident Michael Johnson, 49, may have fewer options in the future when they run into trouble.
After a kidney transplant and a leg amputation several years ago left Johnson unable to work, he racked up credit card debt to pay for basic expenses, he said. This summer, he received subpoenas from creditors seeking to collect on that old debt, according to court records.
“I accidentally got in over my head,” Johnson said in an interview.
Using a CFPB database of credit card terms and conditions, Johnson learned that his creditors were forced to go to arbitration rather than go to court, which could cost more than the underlying debts. Johnson represented himself in court and says so far one creditor has dropped his complaint while the other is considering its options.
“It adds credibility to your defense that you understand your rights,” Johnson said. “Life happens to everyone.”
(Reporting by Douglas Gillison in Washington; Editing by Michelle Price and Michael Learmonth)