WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB), once hailed as the financial watchdog for American consumers, has been thrust into chaos following recent government shutdowns. As of January 30, 2025, the agency had secured approximately $20 billion in restitution and other reliefs for nearly 200 million consumers through its enforcement actions. However, recent administrative moves have curtailed the operations of the CFPB significantly, leaving many worried about the future of consumer protections.
In January alone, the CFPB saw a significant spike in complaints, with nearly 500,000 consumers reaching out for help, surpassing the usual monthly average of 350,000. These cases often involve immediate financial grievances that could cause considerable harm to consumers. Despite the agency’s crucial role, it finds itself among several federal bodies recently closed, having its employees laid off, and its future uncertain amid ongoing lawsuits challenging these closures.
A notable lawsuit comes with a diverse group of supporters including the CFPB Employee Association, legal advocacy groups, and Rev. Eva Steege, an 83-year-old retired pastor. They are contesting the legality of actions taken by appointed officials within the newly formed Department of Government Efficiency which seeks to streamline federal operations. Rev. Steege, facing a personal health crisis with a life expectancy of no more than six months due to advanced chronic pulmonary disease, joined the lawsuit hoping the CFPB could expedite the forgiveness of her $15,000 student loan under the Public Service Loan Forgiveness Program. The shutdown, however, cancelled a critical meeting scheduled for early February that was crucial for resolving her debt.
Further exacerbating consumer concerns, the suit alleges that all outstanding and new enforcement actions against financial malpractices have been suspended due to the shutdown. This halt in operations also affects specific services crucial for military families and students. For instance, payments owed to military servicemembers from a predatory lending settlement remain stalled, and the mandated Student Loan Ombudsman’s office is closed.
The legal actions have seen some judicial intervention. On February 14, Federal District Judge Amy Berman Jackson issued a directive restraining Russell Vought, the agency’s acting director, and others from altering agency data, firing employees without cause, or tampering with the agency’s financial assets. This was ahead of a crucial hearing set for March 3.
Derrick Johnson, NAACP President and CEO, and one of the plaintiffs, voiced strong opposition to the CFPB’s dissolution, emphasizing the potential repercussions on vulnerable communities. Deepak Gupta, a founding principal of Gupta Wessler LLP and former senior counsel at the CFPB, referred to the situation as both a tragedy for American consumers and a blatant disregard for law.
This contentious shutdown of the CFPB not only threatens the financial safety net of many Americans but also challenges the rule of law in governmental operations. As stakeholders brace for further developments, the outcome of this legal battle will undoubtedly have lasting implications on consumer protection in the United States.
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