Banks Suddenly Realize They Might Actually, Kinda, Sorta Need The CFPB, Too

Whoops!

Mar 11, 2025

pink pig coin bank on brown wooden table — Photo by Braňo on Unsplash

Since the very inception of the Consumer Financial Protection Bureau, America’s banks have been railing against it for, well, protecting consumers. After all, how are banks supposed to make any money if they can’t screw their poorer customers by charging them exorbitant junk fees for overdrafts or late credit card payments, let alone simply defrauding them?

Many regular Americans who are not financial institutions themselves (remember: corporations are people) have also been very upset about the CFPB’s regulations, because they actually love being charged exorbitant junk fees for overdrafts or late credit card payments — or, again, being defrauded. Either that or they have no idea what the CFPB even does and have just taken the word of right-wing talking heads that they must hate it.

Now, we all know that those Americans — perhaps when they start looking to buy a house or when they get scammed by someone through Zelle and can’t get their money back, or when we end up having another 2008-style financial crisis — might wish they hadn’t voted for someone with his heart set on destroying the CFPB. At least those who have some idea of what it does, anyway.

But banks? Banks would never change their stance on this. Or would they?

They would! Because, as it turns out, they may end up being entirely screwed if the CFPB is abolished, because while banks are regulated by a number of agencies, the CFPB is the only agency regulating “non-bank financial institutions.”

Via CNBC:

“The CFPB is the only federal agency that supervises non-depository institutions, so that would go away,” said David Silberman, a veteran banking attorney who lectures at Yale Law School. “Payment apps like PayPal, Stripe, Cash App, those sorts of things, they would get close to a free ride at the federal level.” […]
Fintechs led by PayPal and Chime had roughly as many new accounts last year as all large and regional banks combined, according to data from Cornerstone Advisors.
“If you’re the big banks, you certainly don’t want a world in which the non-banks have much greater degrees of freedom and much less regulatory oversight than the banks do,” Silberman said.

Now, it’s understandable why consumers might prefer using Chime to using a traditional bank — there are no monthly fees or overdraft fees for a checking account, plus they have that card that allows people to build their credit without having an actual credit card. However, they got into trouble with the CFPB for closing people’s accounts without notice and sometimes without returning their money. Not great! However, the CFPB got those people their damn money back, plus an extra $150 for anyone who had $10 or more in an account for more than two weeks after it was closed. Chime said the issue was due to a “configuration error” — but there’s no guarantee that anything would have been fixed so quickly without the CFPB requiring it.

Now, you might think that the fact that the CFPB makes these fintech companies significantly safer for consumers to use would be a drawback for banks, but they don’t see it that way. They don’t want these companies to be able to screw customers in a way they are not able to, and they also don’t want consumers to be unaware of the risks that come with using them instead of actual banks.

The Trump administration has been open about the fact that they plan on “winding down” the bureau by firing nearly all 1,700 of its workers, with a goal of having but five employees “running” the whole thing.

That appears to go beyond what even the Consumer Bankers Association, a frequent CFPB critic, would want. The CBA, which represents the country’s biggest retail banks, has sued the CFPB in the past year to scuttle rules limiting overdraft and credit card late fees. More recently, it noted the CFPB’s role in keeping a level playing field among market participants.
“We believe that new leadership understands the need for examinations for large banks to continue, given the intersections with prudential regulatory examinations,” said Lindsey Johnson, president of the CBA, in a statement provided to CNBC. “Importantly, the CFPB is the sole examiner of non-bank financial institutions.”

It sure is!

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And you know what’s interesting about that, don’t you? You know who wants to get back into the fintech game? Elon Musk! He’s been planning for a long time now to turn The Site Formerly Known As Twitter into “an everything app” that would ultimately also be a payment app like Venmo or Paypal. In January, he announced that he was partnering with Visa to create “X Money Accounts.” Had Trump lost, this would have been regulated by the CFPB and will now be regulated by absolutely no one, while regular banks will still be regulated by the Federal Reserve, FDIC and the Office of the Comptroller of the Currency.

We’d feel a teensy bit badly for them, except for how we don’t.

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