According to a report by Yahoo Finance, Senator Elizabeth Warren asserted on Wednesday that only Congress holds the authority to dismantle the Consumer Financial Protection Bureau (CFPB), highlighting a potential legal feud with President Donald Trump following the administration’s decision to halt the agency’s operations.
Warren criticized the move, asserting that Trump and Elon Musk, the head of the newly formed Department of Government Efficiency (DOGE), do not have the power to eliminate the CFPB without congressional approval.
Along with 200 legislators, she urged Russ Vought, the acting CFPB director, and Treasury Secretary Scott Bessent to expel DOGE operatives from the agency and reinstate all operations.
In the past, Warren was pivotal in creating the CFPB after the 2008-2009 financial crisis, to regulate consumer finance at major institutions, focusing on car loans, credit cards, and payday loans. The agency was funded by the Federal Reserve.
The Trump administration recently froze activities at the CFPB, barring staff from entering its Washington, D.C., headquarters, a decision Musk hinted at with a tweet., stating the agency needed to be shut down despite having done some positive work.
Since its inception under the 2010 Dodd-Frank financial reforms, the CFPB has faced significant opposition from many Republicans, who frequently call for its closure, arguing that it contributes to excessive regulatory redundancy in Washington.
Additionally, as per the Wall Street Journal, there have been discussions within the Trump administration about consolidating other banking regulators, potentially merging the Federal Deposit Insurance Corporation (FDIC) with the Treasury Department and the Office of the Comptroller of the Currency, without Congress’s input.
Warren criticized this approach, citing the essential role of FDIC in insuring deposits up to $250,000 per account. She expressed concerns over the future oversight of consumer treatment by large banks, questioning what would transpire if the CFPB ceased its operations.
During a Senate Banking Committee hearing, she questioned Fed Chair Jerome Powell about who would assume the CFPB’s responsibilities if it were dismantled. Powell responded that no other regulator currently fills that role.
Apart from that, Warren and President Trump find common ground in their desire for lower interest rates. During the hearing on Tuesday, Warren urged the Fed Chair to lower rates at the central bank’s next policy meeting in March.
Likewise, Trump advocated for lower rates in a social media post on Wednesday, suggesting that lowering interest rates would complement upcoming tariffs. However, he did not specify a preference for short-term or long-term rates.
Warren has consistently pushed for rate cuts, aiming to make mortgages and credit card payments more affordable for families. Meanwhile, Powell has emphasized a cautious approach, considering ongoing inflation and new trade policies from the Trump administration that may drive inflation higher.
Warren criticized the economic instability created by Musk and Trump, acknowledging the Fed’s hesitation but maintaining that reducing rates is crucial. She stressed the need to alleviate economic disruption to better support American families.
