Riding the fumes of normalcy bias, Senator Liz Warren’s (D-MA) 2010 bureaucratic creation, the deceptively titled “Consumer Financial Protection Bureau” (CFPB), might be facing a DOGE-inspired end to its Constitution-insulting, privacy-invading, politically fascist thuggery that has harmed many participants in many fields of financial services.
Both morally and constitutionally, it never should have begun, but, on the output side, its strongarm tactics and resultant smothering of economic options for us “civilians” out here in the hinterlands also are stunningly destructive.
Let’s take a look.
Reason’s Veronique de Rugy has written a valuable overview of the top reasons to shut down CFPB, starting with the constitutionally iffy origins of the bill, the fraudulent claims of “regulatory power” over myriad transactions they arbitrarily call “financial” (all transactions that use a form of currency are, by definition, tied to “finances” in some way) and the peculiar manner in which CFPB is funded.
And, working back to front, we see clear problems with the “finances” of this “financial protector.”
“The Democrats who wanted this agency thought it would be a great idea for the CFPB to get its funding from the Federal Reserve's earnings (up to a cap) instead of annual appropriations from Congress, all while its director couldn't be fired by the president. The irony is rich. Many of the same legislators who are complaining loudly right now about the lack of congressional oversight over the Department of Government Efficiency designed the CFPB to be insulated from congressional oversight and democratic accountability. And indeed, its aggressive agenda is evidence that the unaccountable structure enables the CFPB to pursue far-reaching policies that can burden businesses and the economy at large.”
As high school students often learn in civics class, all annual funding for branches of the U.S. government must arise from bills originating in Congress. This harkens back to the British parliamentary-monarchy, in which a monarch could dissolve Parliament, but had to rely on it for money. In fact, in the mid-17th Century, Britain’s King Charles I got caught up in just that kind of power-funding fight, which led to his execution, and the brief ascendency of Oliver Cromwell (by the way, Cromwell died of natural causes, not execution – he posthumously was convicted of treason and his dead body decapitated to put his head on display over the Houses of Parliament - lovely).
Since only the Congress can pass U.S. funding bills, giving it the power to feed or starve agencies, one might wonder how Liz Warren’s brainchild gets its cash.
That’s easy. Its funds come from the also Constitution-insulting Federal Reserve Bank of New York.
Yes, despite the fact that the Constitution mandates that the Treasury can make currency (which is dangerous unto itself, since all government issuance of currency tends to see the government inflate the money supply, causing price increases that reporters today call inflation), and despite the fact that the Constitution mandates all such Treasury money must be COIN, the Fed creates cash out of thin air, invests it in US debt and in corporations (as allowed by the 2020 CARES Act, with no oversight and no required public releases identifying the investments), and ALSO funds the CFPB, which claims thuggish power over banks, investment firms, payday lenders, and even companies that offer auto-loans.
If you sense a vast playground on which the Fed and CFPB can have their way, influencing myriad economic interests, you’re not alone.
In fact, this set-up was challenged in the Supreme Court last year, but the majority ruled 7-2 (only Alito and Gorsuch dissented) that it is fine for CFPB to be fed by a perpetual funding system from the CENTRAL BANK, rather than yearly Congressional funding bills.
But de Rugy notes something important in response, which is that the Fed currently is in the red. Its “investments” in US bonds and in numerous corporations see Fed ledgers showing losses, not surplus.
“Additionally, with the Federal Reserve now running losses instead of profits (over $220 billion in losses as of February 2025)—and thus no net earnings to remit—there are technically no ‘earnings’ for the CFPB to draw on. In other words, the CFPB is effectively drawing funds that ultimately add to the Fed's losses (and future taxpayer burden) while Congress remains sidelined.”
Indeed, last June, Alex J. Pollock wrote a powerful piece for the Mises Institute, shredding the rational and sketchy ethics of the CFPB, and observing:
“The Democratic majority which passed the Dodd-Frank Act on a party line vote in 2010—knowing that it was likely to lose the next election (as it did)—cleverly blocked a future Congress from disciplining the new creation through the power of the purse by granting the CFPB a share of the Fed’s earnings every quarter. With inescapable logic, however, that depends on there being some earnings to share in.
Naturally the congressional majority assumed (probably without ever thinking about it) that the Fed would always be profitable. It always had been. But that turned out to be a wildly wrong assumption.”
Absolutely. Pollock reiterates my point about the Supreme Court’s terrible ruling, and serves up the bad economic news:
“The Supreme Court has ruled that the CFPB funding scheme is constitutional. The opinion by Justice Thomas finds that nothing in the text of the Constitution prevents such a scheme, despite, as pointed out in Justice Alito’s dissent, the way it thwarts the framers’ separation of powers design.
However, no one seems to have pointed out to the Court that the Federal Reserve System now has no earnings for the CFPB to share in. Instead, the Fed is running giant losses: it has lost the staggering sum of $169 billion since September 2022, and it continues to lose money at the rate of more than $1 billion a week. Under standard accounting, it would have to report negative capital and technical insolvency.”
Whoops.
And De Rugy notes that much of the CFPB agenda already is handled by other (constitutionally sketchy) bureaus and agencies:
“The Securities and Exchange Commission, for example, has long been responsible for protecting investors, big and small, from fraud. The Federal Reserve has a security function. Then there is the Federal Deposit Insurance Corporation, which supervises financial institutions to prevent reckless banking practices. The Commodity Futures Trading Commission oversees the futures, options, and swaps markets; it's supposed to make sure that trading in commodities like oil, wheat, gold, and financial derivatives isn't rigged by bad actors or overly destabilized by excessive speculation. The Federal Housing Administration enforces fair lending practices in the mortgage market, while agencies like the Federal Trade Commission and the Office of the Comptroller of the Currency have historically handled deceptive financial practices. And so many more are also on the beat, including common-law actions against fraud.”
Fraud is supposed to be handled in court, by real people, on a plaintiff-defendant basis, not "regulated" by an agency.
And, just like many of those federal bureaus operate on a mistaken view of the Interstate Commerce Clause of the Constitution (Art. One, Sec Eight), which was written to allow Congress to handle state-on-state trade disputes, not to allow the federal government the power to claim control over our transactions and employment across the states, the CFPB also plays mobster to steer our private choices in trade.
One of the most egregious examples is the CFPB attack on so-called “Pay-Day Loan” services, which offer on-the-spot loans to willing clients who might not have or want regular bank accounts.
“One of the CFPB's most controversial regulations is its 2017 payday lending rule. It targets payday loans, vehicle title loans, and similar sources of high-risk, high-cost credit. This rule requires lenders to verify a borrower's ability to repay and imposes restrictions to prevent cycles of reborrowing. It also limits repeated debit attempts after failed payments to reduce "excessive" bank fees—like the ones outlined above. While consumer advocates call it a safeguard against "debt traps," it is paternalistic government overreach: The rule restricts access to credit for those who need it most. The CFPB itself estimates that up to 85 percent of payday loans would disappear under full implementation of this rule —without concern for where borrowers would turn instead.
Absent this CFPB rule, millions of Americans voluntarily use small-dollar loans to bridge financial gaps. Eliminating legitimate lenders does not erase the demand for credit; it only pushes borrowers toward shady and riskier alternatives like loan sharks or costly overdrafts. The CFPB's labeling of these loans as "predatory" reflects a subjective value judgment—for those with poor credit, limiting their only borrowing option leaves them worse off.”
This self-created expansion of CFPB power appears to run contrary to last year’s Supreme Court ruling in two cases taken together under the umbrella of “Loper Bright” – a ruling that forbade federal agencies and bureaus from self-expansion, that forbade them from claiming more “power” than the already offensive power over us that Congress handed them.
Indeed, the CFPB expanded its “power” again when pressuring banks last year to stop facilitating automobile loans.
These are mafia tactics, and as DOGE digs into the TRILLIONS in waste and fraud hiding in U.S. government operations, one hopes they will eliminate CFPB.
In 2020, the Supreme Court majority ruled that a president can fire the CFPB director “at will.” But that is not enough.
Separation of powers in the U.S. government, along with the president’s oath to protect and defend the Constitution, mandate that all U.S. presidents must not enforce unconstitutional legislation.
The legislation that created the dread monster of CFPB clearly runs contrary to the Constitution. As a result, President Trump does not need DOGE to suggest the death of the CFPB.
Trump has a duty to end it.
Related:
Supreme Court Rulings Curb Regulatory Agency Powers: A Win For Fishermen
Alito and Thomas Split As Supreme Court Okays Strange Funding Scheme for CFPB