Coalition of 23 Attorneys General Warns Trump’s Actions Against CFPB Will ‘Significantly Harm Consumers’

A coalition of 23 attorneys general is warning that former President Donald Trump’s move to defund and dismantle the Consumer Financial Protection Bureau (CFPB) would have severe consequences for consumers and reduce oversight on major financial institutions.

The attorneys general, along with the District of Columbia, filed an amicus brief asserting that if a preliminary injunction is not granted, “there are several forms of irreparable harm that many states and state residents will suffer as a result of defendants’ actions.”

The brief supports a lawsuit filed on February 12 by the city of Baltimore against the CFPB and Acting Director Russell Vought in the U.S. District Court for the District of Maryland.

“The only reason to get rid of this watchdog agency is to protect bad actors,” said New York Attorney General Letitia James in a press release. “Working families need the CFPB, especially as rising prices are making it hard to make ends meet and put food on the table.

My office is leading this coalition to help protect the agency that has protected all of us.”

The attorneys general emphasized that with the CFPB ceasing its operations under directives from Trump and Vought, states have lost a crucial partner in consumer protection enforcement. The agency was responsible for ensuring large banks complied with consumer protection laws and frequently collaborated with states on supervision and enforcement efforts.

“The sudden withdrawal of these CFPB services, supervision, and collaborative assistance will thus inflict immediate harm on states and their residents,” the brief stated.

The attorneys general from New York, the District of Columbia, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin joined in filing the brief.

The CFPB has not issued a response regarding the lawsuit.

This action follows Trump’s appointment of Tesla chairman Elon Musk to lead the newly established Department of Government Efficiency (DOGE), which was created to address wasteful government spending. Musk and his team have undertaken significant efforts to reduce the federal workforce and have targeted agencies such as USAID and the Department of Education for budget cuts or closure.

On February 3, Vought ordered the CFPB to halt work on proposed regulations, delay the implementation of any finalized but not yet effective rules, and suspend all investigative work, prohibiting new investigations, as reported by PBS.

The CFPB, established in 2011 following the 2008 financial crisis, serves as a financial watchdog for American consumers. It operates independently of congressional appropriations, instead receiving funding through the Federal Reserve. Despite facing challenges to its funding structure, the U.S. Supreme Court ruled in May 2024 that its funding mechanism is constitutional, allowing the agency to continue operations.

Under its former director, Rohit Chopra, who was dismissed by Trump on February 3, the CFPB aggressively pursued regulatory action against major financial players, including online payment platforms such as Block and banks like Capital One and JPMorgan Chase. The agency also introduced regulations related to Big Tech, financial privacy, the gaming industry, and cryptocurrencies.

Additionally, on February 9, the National Treasury Employees Union filed two lawsuits against Vought, alleging violations of employee privacy and arguing that the president lacks the authority to dismantle or dictate the missions of executive branch agencies that were created by Congress. 

By fLEXI tEAM