Why banks don’t want the desk to disappear

For years, American financial companies have fought against the Bureau for Financial Protection of Consumers – the Chief Us Consumer Finance Watchdog – in the courts and media and the office displayed as illegal and unfairly focused on players in the industry.

Now, with the CFPB on Lifestone support After the Trump administration had issued a STOP work order and closed its head office, the agency is with an unlikely ally: the same banks that have reliably complained about its rules and enforcement actions under former director Rohit Chopra.

That is because if the Trump administration succeeds in reducing the CFPB to a scale of its former self, banks would directly compete with non-bank financial players, from large technology and fintech companies to mortgage, car and payment day loan providers, which have much less federal control.

“The CFPB is the only federal agency that supervises non-depository institutions, so that would disappear,” says David Silberman, an experienced bank lawyer who reads lectures at the Yale Law School. “Payments apps such as PayPalStripe, Cash appThings like that, they would come close to a free federal level. “

The shift could turn the clock back to an environment before 2008, where it was largely left to state officials to prevent consumers from being scammed by non-bank providers. The CFPB was founded in the aftermath of the 2008 financial crisis that was caused by irresponsible loans.

But since then, digital players have made considerable entry by offering bank services via mobile phone apps. Fintechs led by PayPal and Chime had about so much New accounts Last year as all major and regional banks together, according to data from Cornerstone advisors.

“If you are the big banks, you certainly do not want a world in which the non-banks have much greater degrees of freedom and much less regulatory supervision than the banks,” Silberman said.

The CFPB and its employees are in the uncertain after acting director Russell Vought took over last month and issued a flurry of guidelines to the then 1,700 employees of the Agency. Working with agents from the Ministry of Government Efficiency of Elon Musk, Vought quickly dismissed around 200 employees, reportedly took steps to put an end to the construction lease of the agency and canceled contracts of contracts required for legally required tasks.

In internal e -mails released on Friday, detailed CFPB Chief Operating Officer Adam Martinez detailed plans to remove around 800 supervision and enforcement workers.

Senior Executives of the CFPB shared plans for more dismissals that the agency with only five employees would leave CNBC. That would be the ability of the agency to perform its supervision and enforcement tasks.

That seems to go further than even the Consumer Bankers AssociationWould like a frequent CFPB critic. The MKBA, which represents the largest retail banks in the country, has sued the CFPB in the past year to limit rules that limit late costs for the redstand and credit card. More recently, it noted the role of CFPB when maintaining a level playing field among market participants.

“We believe that new leadership understands the need for exams for large banks to continue, given the intersections with prudential regulatory investigations,” said Lindsey JohnsonPresident of the MKBA, in a statement provided to CNBC. “It is important that the CFPB is the only researcher of non-bank financial institutions.”

Vought’s plans to bump the agency were stopped by a federal judge, who is now considering the merits of a court case brought by a CFPB Union that requires a provisional order.

A hearing where Martinez is planned for witnesses is planned for Monday.

In the meantime, bank managers of antagonists of the CFPB have moved to one of the people involved, it will disappear.

At a bankers’ convention at the end of October in New York, JPMorgan Chase CEO Jamie Dimon encouraged his colleagues to “fight back“To regulators. A few months before, the bank said it could sue the CFPB for its investigation into peer-to-peer payment network Zelle.

“We prosecute our regulators time and again because things become unfair and unjust, and they hurt companies, many of these rules harm lower people paid,” Dimon said at the convention.

Now there is a growing consensus that a first push “to delete“The CFPB is a mistake. In addition to increasing the threat of non -banks, the current rules of the CFPB would still be in the books, but there would be no one in the neighborhood as the industry evolves.

Small banks and credit associations would be more disadvantaged than their larger colleagues if the CFPB would disappear, the proponents of the industry say because they were never regulated by the agency and would get the same regulatory control as before.

“The conventional wisdom is not good for banks to just want the CFPB Go awayOr that banks want regulator consolidation, “said a director of a large American bank who refused to be identified about the Trump government.” They want a thoughtful policy that will support economic growth and maintain safety and reliability. “

A senior CFPB lawyer who lost its position in recent weeks said that the coordination of industry with Republicans may have failed.

“They are about to live in a world in which the entire non-bank financial services are not regulated every day, while they are checked by the Federal Reserve, FDIC and OCC,” the lawyer said. “It’s a world where ApplePayPal, Cash app and X become in the wild for four years. Success.”