6 Ways Trump’s Closing This Major Consumer Advocacy Agency Could Impact Your Finances

The Trump Administration is closing the Consumer Financial Protection Bureau in the “next two or three months,” said White House budget chief Russell Vought on a recent episode of “The Charlie Kirk Show,” per The Well News.

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The shuttering of the fiscal oversight agency could have a potentially significant effect on the finances of average Americans.

Here’s a look at the plan to shut down the CFPB and how it could affect you directly.

The Consumer Financial Protection Bureau was created in 2010 by an act of Congress, the Dodd-Grank Wall Street Reform and Consumer Protection Act. It formally began operations in 2011. The collapse of the real estate and financial markets in 2008-09 provided the impetus to create a government agency to oversee and regulate consumer-facing financial products and services. Its general mandate was to protect individuals from unfair, abusive or deceptive practices in financial products ranging from mortgages and auto loans to credit cards, debt collection, student loans and credit reporting.

Some of the specific functions undertaken by the CFPB have included:

• Ensuring that banks, credit unions and financial services firms comply with consumer finance laws

• Investigating consumer complaints regarding financial services

• Regulating historically abusive financial practices, including high-fee auto loans, payday lenders and credit card interest rates

• Operating a consumer complaint database

• Returning more than $21 billion dollars to consumers who encountered financial fraud and/or abuse

Essentially, the CFPB has gone to bat for consumers in the face of powerful financial services firms that oftentimes try to get away with whatever they can when it comes to making money off customers. For example, since the housing crisis of 2008, which was triggered in part by predatory lending practices, the CFPB has stepped up to fill the gap when it comes to oversight, regulation and enforcement.

Here are some of the potential ramifications of a CFPB closure:

• Reduced oversight of financial services firms

• Rolled-back regulation and fewer consumer protections

• Fewer avenues to make complaints against financial fraud and abuse

• Less restitution paid to consumers

• Potentially higher interest rates on products like auto loans or credit cards, particularly for those with bad credit and few options

• Increased risk of 2008-style market disruptions

In other words, the ability for financial services firms to take advantage of vulnerable or unwary customers could jump significantly. Without a government watchdog to keep profit-driven financial services firms in line, costs — and abuse — could rise.

Without a CFPB, consumers will be more responsible for their own protection. This means that you should act with extra vigilance regarding every aspect of your financial life. Suggestions include:

• Read every line of any financial contract you encounter, being sure to understand it fully before you sign.

• Look for hidden fees, changing rates or varying terms on everything from mortgages and auto loans to credit cards and student loans.

• Be extra wary of lenders who use high-pressure sales tactics or insist that a deal must be done “today” or else you will miss out.

• Review your credit report regularly.

• Work to improve your credit score so you’re a prime customer and not at the mercy of predatory lenders.

• Keep sufficient cash reserves so that you’re never desperate enough to take out a payday loan or borrow from a high-rate lender.

The Trump Administration’s efforts to shut down the CFPB center around three main principles:

• Cutting spending: The Trump Administration, along with Elon Musk during his short run as head of the Department of Government Efficiency (DOGE), have targeted the CFPB as wasteful government spending. As White House budget director Russell Vought has said, “We want to be very aggressive where we can be in shuttering the bureaucracy, not just the funding.”

• Trump Administration ideology: Vought, and the Administration as a whole, see the CFPB as overreaching its mandate and imposing burdensome regulation on financial services firms. As Vought put it, “All they [the CFPB] want to do is weaponize the tools of financial laws against basically small mom-and-pop lenders and other small financial institutions.”

• Funding/legal squeeze: According to the Trump Administration, current funding for the CFPB is illegal. The agency is only allowed to receive funding from the earnings of the Federal Reserve, and as that agency operates at a loss, the administration argues that funding should cease.

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This article originally appeared on GOBankingRates.com: 6 Ways Trump’s Closing This Major Consumer Advocacy Agency Could Impact Your Finances