Inside Trump and Musk’s War on the Consumer Financial Protection Bureau
The new boss at the Consumer Financial Protection Bureau had a jarring message for staffers Monday morning, in an internal memo leaked to Rolling Stone: “Stand down from performing any work task.”
The message came from Russell Vought — a Project 2025 architect who was confirmed by the Senate last week to lead the Office of Management and Budget in the Trump White House. One of Vought’s first official acts was to seize the reins as acting director at CFPB, the agency designed by Congress to safeguard Americans from the predatory practices of Wall Street and other financial malefactors.
The brainchild of now-Sen. Elizabeth Warren, the CFPB is one of the few agencies in Washington whose mission is to protect individual Americans against corporate power. It routinely orders large corporations to refund money to duped and abused consumers — more than $20 billion over the lifetime of the agency. It also wards against the kinds of systemic risks that led to the financial crisis of 2008.
To insulate CFPB from partisan reprisal, it is funded by the Federal Reserve, meaning that a hostile congressional majority can’t zero out its budget. That CFPB’s funding mechanism was declared constitutional by the conservative-dominated Supreme Court just last year.
Nuking the CFPB has long been a Republican priority. Project 2025, the conservative policy playbook Vouht played “an indispensable part” in developing, recommends abolishing the bureau, calling it “utterly unaccountable.” The Trump administration — marching to the tune of the de-facto head of government Elon Musk — is naturally seeking to hogtie the bureau and cut off its funding, moves that experts insist pose a major conflict of interest.
Musk, the world’s richest man, wants to transform X (formerly Twitter) into a peer-to-peer payments platform, which would likely subject the company to CFPB regulation — so it’s no surprise he sees the bureau as a bugbear. He sicced his so-called Department of Government Efficiency (DOGE) minions on the agency last week, before tweeting out “CFPB RIP” adding a headstone emoji.
“It’s the USAID playbook,” a CFPB lawyer tells Rolling Stone, referring to the foreign aid agency Musk helped send through the “wood chipper” last week, shutting down life-saving relief operations across the globe.
New administrations often put acting directors in charge of agencies and even pause substantive regulatory and legal work until permanent leaders can be put in charge. “Withdrawing rules that haven’t gotten into effect yet is not surprising or shocking to anyone,” says the lawyer, who spoke on condition of anonymity to avoid reprisal.
But Vought has also taken CFPB examiners out of the field, a move the lawyer likens to taking cops off the beat. “It means that the CFPB is not going to uncover consumers being harmed,” he says. That includes people having their cars wrongly repossessed, debtors being charged abusive fees that keep them paying down their loans, and people with disabilities wrongly being denied student loan forgiveness.
The CFPB is a unique agency, but the bureau lawyer draws a parallel to food safety: “The USDA secretary doesn’t need to pause meat inspections when they take office,” he says. “It suggests to me that they intend to fully cease operations.”
Monday’s order for employees to “stand down” adds to a sense of dread around the bureau’s future. “There was still work to do,” the attorney says, ranging from resolving “legal questions around how to comply with executive orders” to managing vendors or responding to public record requests under the Freedom of Information Act (FOIA).
Vought tweeted Sunday that CFPB has become “a woke & weaponized agency” adding: “this must end.” He also announced that he is turning off the “spigot” to the CFPB — by refusing to draw new funding from the Federal Reserve, on the logic that the CFPB current cash-on-hand is “excessive.” (The bureau’s roughly $700 million reserve represents less than a year of funding; Musk has called on that money to be “returned.”)
With Vought sending CFPB staffers home and barring them from conducting work, the acting director has also cleared the field for Musk’s controversial band of DOGE bros to infiltrate the internal systems and records of the bureau. This represents a significant security risk for companies regulated by CFPB as well as potential conflict of interests for Musk, according to the bureau lawyer.
“If I were a potential competitor of Elon Musk‘s planned payment app, I would be concerned about DOGE having access to my confidential supervisory information,” the lawyer says, using agency jargon for proprietary business information. This can include balance sheets, risk-management practices, and other “extremely private” information that is not releasable under FOIA. “Now Elon Musk gets to look at all of that,” the lawyer asserts.
With communications staff idled, Rolling Stone reached out to Mark Paoletta, whom Vought identified in Monday’s memo as CFPB’s chief legal officer. Paoletta was reportedly responsible for issuing the controversial, now court-enjoined, Trump administration memo implementing a sweeping federal spending freeze. (He is also a close friend and vigorous defender of Supreme Court Justice Clarence Thomas.) Paoletta did not immediately respond to Rolling Stone questions.
A recent-former CFPB staffer echoes the concerns of the bureau lawyer that DOGE could misuse records that are intended to be confidential. Julie Margetta Morgan was an associate director of research, monitoring, and regulations with the bureau. She warns that Musk may now have “access to data about his competitors in a way that gives him a massive advantage.”
Morgan adds that CFPB shutdown is rife with “conflict of interest” that runs all the way to the top. “You have multiple players in the Trump administration — including the president himself — who have a personal financial stake in having a weak or non-existent regulator,” she says. “The steps they’ve taken over the last few days have a major downside for consumers, and a major upside for key players in the Trump administration.”
Notably, the Trump family has made recent moves into the financial sector, infamously issuing crypto meme coins and launching World Liberty Financial, a firm that describes its mission as “dismantling the stranglehold of traditional financial institutions.”
Speaking about Musk’s platform X and other Big Tech firms, Morgan says: “They want to play in the financial services space, but they don’t want to play by the same set of rules. They simply do not think that ought to be regulated by the same institutions that regulate big banks.”
The assault on CFPB is just an opening salvo in a broader battle against financial regulation, Morgan warns. “It’s about opening the floodgates for big banks to have their way on financial services. It’s incredibly dangerous, both for individuals and for the economy as a whole,” she says, noting that CFPB is intended to help prevent another financial crisis.
Vought’s shutdown orders and the intrusion of DOGE into the bureau have already provoked a legal reaction. CFPB union members have filed a pair of federal lawsuits against Vought. One seeks to have a judge enjoin his stop-work order unlawful as a violation of “separation of powers,” because Congress sets CFPB’s mission. The second seeks to block DOGE from accessing bureau records, including sensitive employee data.
The CFPB lawyer is confident the essential work of consumer protection will be harder to kill than Vought & Co. believe, because the Consumer Financial Protection Act includes a little-known safeguard: “They will regret nuking the CFPB, especially once they realize that states can enforce the [law].”
If the CFPB is hobbled expect states to “pick up the slack,” he says. “They won’t be as expert or have as many resources, but they would probably hire a bunch of us.”
In the meantime there’s a personal cost for public employees caught in the crossfire of an ideological war. “It sucks,” says the lawyer. “I have kids. These people are trying to make us miserable for no reason.”
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