A Beat Without A Cop

As the second Trump Administration attempts federal government operations reform much as billionaire Elon Musk approached the revamp of Twitter into X — i.e., more with a chainsaw than a scalpel — it’s not happening in a vacuum. 

For instance, many believe there are risks in eliminating the Consumer Financial Protection Bureau (CFPB), the consumer watchdog that was, figuratively speaking, very nearly a canine put to sleep at the pound last week. 

But, just what was in the works at the CFPB, anyway?

“Really, what was in flight was a lot of big investigations over large companies, banks, non-banks, big tech companies who we thought might be breaking the law,” former CFPB Director Rohit Chopra told CNBC Television days after he was fired January 31. 

“So, the news about law enforcement, really, being told to stand down,” he added, “I’m really worried that this is just not going to be fair for all those mortgage lenders and banks and others who are following the law and are going to have to compete with those who just think they’re above the law.” 

The CFPB was formed in 2010 in the wake of the subprime mortgage crisis, which nearly caused a full economic meltdown and precipitated the Great Recession. 

“At the end of the day, we should want to make sure that the CFPB is actually a strong cop on the beat,” Chopra contended. “Because there was no agency focused on some of this, that’s part of the reason we had a subprime mortgage meltdown.” 

“So I’m not really sure it makes sense to want to just ‘put away’ a CFPB,” he continued. “It seems like you’re almost baiting another crisis.”

News came this past Thursday that some 95% of the CFPB’s workforce could be imminently eliminated, though a Washington, D.C., district court judge has now temporarily blocked firing of CFPB employees without cause as well as deletion of CFPB data.   

Democrats’ response

On February 11, U.S. Rep. Tim Kennedy (D-NY) agreed with Chopra, pointing to what he said were the CFPB’s successful efforts in his district to address consumers’ complaints about mortgages, credit reporting, debt collection, and more. The CFPB’s impact, he contended, “is not abstract, it makes a real difference in peoples’ lives.” 

“The CFPB was created to protect consumers from the kinds of abusive practices that led to the 2008 financial crisis, and now, with no accountability, billionaires and corporate special interests want to rig the system in their favor once again,” Kennedy stated. 

Going back to January, several days prior to President Trump’s inauguration, Rep. Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, released what she termed a “fact sheet” concerning then President-elect Trump’s and Musk’s would-be plans to delete the CFPB. 

Waters claimed the removal of the CFPB would have “disastrous” consequences for American families and the economy. Defending the agency’s track record under former Director Chopra, she cited as one example the CFPB’s attempt to ban medical debt from credit eligibility determinations. 

That move, according to the CFPB, would have resulted in an additional 22,000 mortgages annually. The agency said its final rule to this effect, which was published in the Federal Register January 14, would remove some $49 billion in medical bills from credit reporting for 15 million Americans, and that those with medical debt on their credit reports could see their credit scores rise by an average of 20 points. 

Sen. Elizabeth Warren (D-MA), a member of the Senate Committee on Banking, Housing, and Urban Affairs, referred to CFPB as “the cop on the financial beat,” much as former Director Chopra characterized it. 

“The question is not who the nominee is,” Warren stated after Russell Vought, who on February 7 was confirmed to lead the Office of Management and Budget (OMB), was appointed acting director of the CFPB and made known his intentions to cut the agency off. 

“The question,” she said, “is whether ‘co-presidents’ Elon Musk and Donald Trump will let the CFPB continue its work as the cop on the financial beat, or will they keep trying to illegally shut down the agency and let Wall Street cheat American families?” 

Musk’s vision 

There’s not much uncertainty as to how President Trump’s Department of Government Efficiency (DOGE), headed by Musk, intends to approach reforming the federal government. 

Indeed, it’s not “reform,” the goal is more like “selective erasure.” During a speech presented in Dubai, United Arab Emirates on February 12 and reported by the Associated Press and others, Musk spoke again of “deleting” entire federal agencies instead of overhauling them, since otherwise they’ll just grow back like “weeds,” as he phrased it. 

“We do need to delete entire agencies as opposed to leave [sic] part of them behind, because if you leave part of them behind, it’s easy — it’s kind of like leaving a weed,” Musk said. “If you don’t remove the roots of the weed, then it’s easy for the weed to grow back. But if you remove the roots of the weed, it doesn’t stop weeds from ever growing back, but it makes it harder.” 

“So we have to, really, delete entire agencies — many of them,” he emphasized. “We really have, here [in the U.S.], rule of the bureaucracy, as opposed to rule of the people, democracy.” 

Musk told the Dubai multinational audience the Trump Administration wants to restore rule of the people, “and what that means is reducing the size of the federal government, basically reducing regulation.” He contended there is presently in the U.S. “a tremendous amount of overregulation that’s happened over time.” 

In an executive order issued the day before this particular Musk speech on DOGE, President Trump called for federal agencies to “undertake plans for large-scale reductions in force and determine which agency components (or agencies themselves) may be eliminated or combined because their functions aren’t required by law.”

What remains less certain, however, is how Trump and Musk envision maintaining checks, balances, and protections in such a — potentially — radically downsized government, should it come to pass. 

View from another angle

From a mortgage industry perspective, one of the most recent and prominent actions by the CFPB was to sue Rocket Homes, Jason Mitchell, and The Jason Mitchell Group of real estate brokerages over alleged violations of the Real Estate Settlement Procedures Act (RESPA) back on December 23. 

The CFPB alleged there was a years-long scheme involving kickbacks between the companies and the steering of mortgage borrowers to Rocket Mortgage.

National Mortgage Professional spoke with Jason Mitchell, who, again, is personally named in that lawsuit, about the experience of being investigated for years by the CFPB, and got his thoughts about the agency having a questionable future under the new Trump Administration. 

“I don't really know why, of all the people they could have picked to do this investigation, they picked me,” Mitchell said. “I don't have an answer for that today, but I never thought it was actually a thing for me, because I got a letter from them that said that they want all this information — emails and a bunch of stuff.” 

“And of course, we provided it because we had nothing to hide,” he added. Mitchell noted that during the course of the investigation, CFPB agents “weren't rude to me, but there were a lot of things about this case that I kept saying to them, like, ‘Ok, but that has nothing to do with me.’” 

For his part, he contended the case has no merit. “For example, one of the things they [the CFPB] talked about was, ‘Did you know that consumers actually were paying more on their mortgage when they went to Rocket Homes and closed with Rocket Mortgage?’ And my answer was, ‘How would I know that? I don't write the loan.’”

“My real estate agents don't know anything about the loan, nor should they — why would they care?” Mitchell said, describing what he characterized as a basic misunderstanding of the real estate and mortgage industries on the part of the CFPB. 

Alright, so, what if the CFPB were to have an uncertain future, or even be dissolved?  

“My feeling is, I have no issue with the CFPB being a part of protecting consumers,” Mitchell replied to that question. “But protect consumers. Go after people that are, you know, taking advantage of elderly or the handicapped, or people that are true scumbags.” 

“Going after good businesses that do things right doesn't do anybody any good — it just creates an environment for consumers to not have trust in what would be good companies,” Mitchell said, again expressing his own view.   

He noted that “frivolous” lawsuits, as he said he believes the one CFPB filed against him and his real estate brokerages is, also serve to make things more expensive for consumers, since targeted companies then have to spend millions of dollars to defend themselves, which ultimately is passed on to consumers.  

The CFPB lawsuit against him and Rocket Homes, he insisted, “is ridiculous.” Similarly, Rocket Homes has termed the “flimsy” and “baseless” lawsuit a “reckless and shocking misuse of public resources.”

In a similar vein, Mitchell echoed, “I don't have an issue with having a CFPB that actually is protecting consumers; I have an issue with the CFPB that is just going after companies with, really, baseless claims.”

Mitchell’s hope, he said, was that the new administration would look at the CFPB’s lawsuits and actions on a case-by-case basis, deciding which are valid and have merit, and which aren’t and don’t — rather than a wholesale dissolution of the agency. 

For more on the potential impact of a CFPB loss, including whether the mortgage industry is prepared to effectively and ethically operate on the (lack of a) regulatory frontier that the Trump Administration proposes, here’s a comprehensive take from NMP’s Ryan Kingsley.