Who’s Afraid of the CFPB?

The CFPB was established in 2010 in the aftermath of the 2008 financial collapse, during which more than six million people lost their homes due to foreclosure and more than thirty million people lost their jobs. While other agencies like the Justice Department, the SEC, and the Commodity Futures Trading Commission focus mostly on white-collar crimes, the CFPB is tasked with policing large financial institutions as well as debt collectors, payday lenders, and mortgage providers and protecting consumers from unfair financial practices.

Since 2010, the bureau has returned more than $20 billion to consumers who were victims of financial scams, fraud, and other predatory practices. For example, in 2024, the CFPB ordered a group of credit repair companies to return more than $1.8 billion to 4.3 million consumers for charging illegal fees and using deceptive marketing practices.

The bureau has also focused on eliminating “junk fees” that banks and other financial institutions charge consumers for overdrawing their accounts and restricting other practices, such as capping how much credit card companies can charge for late payments. In 2019, the top twenty banks in the United States collected more than $11 billion in overdraft and insufficient fund fees issued to consumers, according to the CFPB. In 2023, banks earned more than $5.8 billion in overdraft fees, federal data shows.

Years ago, banks charged overdraft fees for customers who wrote bad checks or overdrew their accounts because the process for banks to retrieve their money came with a cost, said Naylor with Public Citizen. But that is largely no longer the case.

“In the days of electronics, where the bank knows that you have insufficient funds, it can just set an algorithm to block that payment,” he said. “So the concept that it costs you to get penalized $32 on average [for overdrawing your account] is simply useless, and many banks don’t charge. There are banks, though, [for which] this is how they make their profit.”

Post-pandemic, overdraft fee revenue for the top banks spiked in 2022, with banks collecting $7.61 billion in fee revenues. Around that time, the CFPB began scrutinizing the practice by issuing reports highlighting how much money banks were raking in from overdraft fees and issuing enforcement actions.

In January 2022, the CFPB announced a request for public comment on how overdraft and hidden banking fees were affecting consumers, in anticipation of possible regulations.

“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” said former CFPB Director Rohit Chopra in a January 2022 press release. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”

The CFPB’s scrutiny of overdraft fees led Scott and other Republican senators to condemn the bureau’s efforts in their September 12, 2022, letter.

“Rather than operating as a tough, but fair and sensible regulator, the CFPB is again pursuing a radical and highly-politicized agenda unbounded by statutory limits,” the senators wrote.

CFPB regulators also began working to lower the cost of late credit card payment penalties. In 2022, major credit card companies charged their customers more than $105 billion in interest and more than $25 billion in fees, the highest amount ever measured.

On April 13, 2023, Scott and other senators again wrote to the bureau to complain about its banking crackdowns.

“Last year, the CFPB launched an unfair initiative targeting standard fees charged by credit providers that included reasonable payment incentive mechanisms such as overdraft and credit card late fees,” the senators wrote. “This initiative mislabeled lawful payment incentives by calling them ‘junk fees’ and falsely suggested that their only purpose is corporate greed.”

The senators continued: “In truth, these fees are used for a variety of legitimate purposes, including encouraging consumers to make responsible financial decisions such as balancing their checkbooks and discouraging consumers from paying their bills late or otherwise violating the terms of financial agreements.”

Despite the senators’ concerns, the CFPB finalized a rule capping late credit card payment penalties to $8 in March 2024. Then, in December 2024, the CFPB finalized its rule on overdraft fees, requiring large banks and financial institutions to in most cases charge no more than $5 in overdraft fees.

Scott is now working to rescind the overdraft fee rule using the Congressional Review Act, which empowers Congress to repeal any agency rule issued within the last few months of a previous president’s administration. On February 12, House Republicans voted to extend the Congressional Review Act’s scope to include the entire final year of a previous president’s term — meaning the late credit card late fee cap could also be at risk if the bill becomes law.

Scott’s Piggy Bank

Before being elected to the Senate in 2013, Scott, a former insurance salesman, held various state and local positions and was a member of the US House of Representatives. In 2023, he mounted a short-lived campaign for the Republican Party’s presidential nomination.

Throughout his federal career, Scott has been a major benefactor of campaign contributions from the banking and financial sectors.

The largest contributor to Scott’s election efforts throughout his career has been employees and political action committees affiliated with the multinational investment bank Goldman Sachs, according to campaign finance watchdog group OpenSecrets. These individuals and groups have donated more than $278,000 to Scott since 2009. This includes nearly $26,000 from Goldman Sachs executive vice president John Rogers and $10,000 each from company executives David Solomon and David Philip, according to federal data we reviewed.

Scott and his campaign committees have also received hundreds of thousands of dollars in campaign donations from hedge fund magnates — including more than $266,000 from Paul Singer, CEO and president of Elliott Investment Management, and nearly $395,000 from Daniel Loeb, CEO of Third Point LLC.

He’s furthermore received money from big banks targeted by regulators for gouging consumers with junk fees.

A political action committee made up of Wells Fargo employees has donated more than $29,000 to Scott’s election efforts since 2013. Additionally, political action committees affiliated with Bank of America and JPMorgan Chase have donated $18,500 combined to Scott’s election efforts since 2013.

In 2022, the CFPB published a chart highlighting how Wells Fargo, JPMorgan Chase, and Bank of America together collected more than $2.7 billion in overdraft fees over a nine-month period in 2021.

Now, having been elected chair of the Senate Banking Committee in January, Scott has the power to set the agenda for the committee that oversees the CFPB — which helps regulate his financial industry donors.

Crypto and Fintech Protection Bureau?

Last month, Scott said he would support cutting the CFPB’s funding as a way to pay for extending Trump’s 2017 tax cuts — an economic plan that will largely benefit corporations and the wealthy, according to Trump’s own Treasury Department.

According to the Banking Committee’s website, Scott’s agenda will focus on cutting regulations for credit, capital, and other financial lending services including financial technology companies — a key focus of billionaire Elon Musk, who posted “CFPB RIP” on February 7 and claimed that the bureau “did above zero good things, but still need to go.”

X/Twitter, Musk’s social media company, partnered with Visa in January to allow X users to send money through their accounts, similar to apps like Venmo or Zelle. The move would place Musk’s business under CFPB oversight.

“Elon Musk is turning X into a payments platform, and the CFPB would have been a primary impediment to his doing so,” said Hilary Allen, a law professor at American University. “Given the ascendance of Silicon Valley interests in this government, I think that’s an important layer to the story of why we’re losing the CFPB.”

Scott also promised that one of the committee’s major goals would be to slash regulations for the crypto industry.

In January, Trump’s SEC, an agency that Scott oversees, rescinded a key advisory bulletin that essentially blocked banks and large financial institutions from holding large stores of cryptocurrencies and conducting certain crypto transactions, due to crypto’s potential to cause widespread volatility in the financial markets.

Scott became a staunch supporter of cryptocurrencies this past summer when he vowed to help pass a bill establishing a federally held Bitcoin stockpile, which would likely be a massive handout to the largest Bitcoin owners. Scott received more than $38,000 in campaign donations this past election cycle from a number of crypto figureheads, despite not facing reelection, federal data shows.

Experts warn that allowing largely unregulated and volatile cryptocurrencies to become enmeshed in the country’s financial system could lead to economic disaster.

“We’re in a position where without consumer safeguards, there can be contagion for the rest of the financial system,” Allen said. “So if we lose the CFPB, consumers are losing someone that they can go to for help.”

In the Senate Banking Committee’s policy agenda, Scott also promised to “ensure all agencies within the committee’s jurisdiction are open and transparent, follow the law, and advance commonsense policies that create economic opportunity.”

But Allen is doubtful that Scott will hold Musk and other Trump officials accountable for their efforts to dismantle these agencies. So is Naylor at Public Citizen, who believes efforts to gut consumer protections will hurt the average consumer.

“Bankers have long known that they are highly regulated, and they need to buy off both the Democrats as well as the Republicans,” Naylor said. “It’s unfortunate that banking policy is relatively unmonitored by people sitting around their kitchen table, and even though they might be angry at an overdraft fee and so forth, they may not link that back to their senator.”