- US Consumer Financial Protection Bureau database could be shuttered.
- Danger of no federal oversight of existing and new financial companies.
- X’s operations as ‘everything app’ offering financial services to benefit.
Donald Trump and Elon Musk’s purge of federal agencies could have significant ramifications to the US’s financial system, according the the Consumer Financial Protection Bureau’s ex-chief technologist.
Erie Meyer, who lost his job last week, said, “I believe that the deletion of the CFPB’s databases and contracts would cause irreversible damage […] to consumer protection and the financial system as a whole.”
The CFPB hears consumer complaints about financial issues experienced at the hands of companies in the US. The deletion of the Bureau’s data would put existing issues at risk of disappearing, according to Meyer. The organisation began to lay staff off last Tuesday, with all staff still in their probationary periods let go. Those employees under fixed-term contracts were fired later that week.
Meyer claims in an affidavit filed with the Supreme Court [PDF], that over 12 years’ of records could be lost as a result of staff losses. The Bureau employed around 1,600 staff before the layoffs began. Although the Consumer Complaint Database remains online at the time of writing, the future is unclear as to whether any of the extant complaints will be pursued. Records of nearly eight million complaints from US consumers currently exist, including 385 concerning Elon Musk’s Tesla company. Musk posted “CFPB RIP” on Friday on his X platform.
The world’s richest man has long had plans to transform X into an ‘everything’ app, akin to those operated in China by Tencent and WeChat. Such apps offer a wide range of goods and services from a single GUI, ranging from taxis and deliveries to financial products. By removing the claws of the CFPB (or dismantling it altogether), the way forward is clear for X to begin to offer financial services without oversight from the Consumer Financial Protection Bureau, which champions the causes of consumers who claim mistreatment by companies.
X has acquired so-called ‘money-transmitter’ licences in 41 states, and has announced a deal with credit company Visa that would allow X’s ‘everything app’ to offer a digital wallet.
There are existing laws that prevent government employees working in areas in which they have a financial interest, but the White House press secretary Karoline Leavitt has said that it would be Musk’s decision whether or not to recuse himself and cite a conflict of interests.
The data held by the CFPB includes information on issues raised by consumers about many of X’s potential competitors, and Lisa Gilbert of advocacy group Public Citizen, is concerned that systems and software engineers employed by DOGE, headed by Elon Musk, would access this sensitive data. She described the situation as, “having a conflicted billionaire in charge of looking at what is going on in government and making decisions.”
The CFPB is currently under a stop-work order that has halted all its enforcement and regulatory work. The loss of a publicly-accessible database of complaints and issues would seal the fate of the Bureau as a lame duck regulator, and give financial organisations greater freedom to operate without transparent oversight at federal level.
Speaking to Yahoo! Finance, the managing director of policy at Americans for Financial Reform, Patrick Woodall, said, “Musk does not want an active CFPB that will make sure that [X] is following the rules, that it is not ripping off consumers.”
There would remain oversight at individual state level of financial organisations, although levels of oversight and penalties for transgression of financial regulations could vary widely from region to region.
