Trump Administration Says CFPB Has Cost Consumers Hundreds Of Billions Of Dollars

Since its inception in 2011, the CFPB has cost consumers between $237 billion and $369 billion, the Trump Administration's Council of Economic Advisers (CEA) said, in a  report.

“Through a combination of regulation, supervision, and the threat of enforcement actions, the CFPB has raised costs for both borrowers and lenders,” the CEA said, adding that the largest component– increased borrowing costs–accounts for $222 billion to $350 billion of this total.

“The regulatory burden imposed by the Consumer Financial Protection Bureau (CFPB) has increased the compliance and liability costs associated with consumer financial products, which financial institutions pass on to consumers in the form of higher prices and reduced product offerings,” the CEA said.

The CEA estimated that for 2024 alone, the combined annual cost of credit for mortgages, autos and credit cards attributable to the CFPB is between $24 billion and $38 billion.

The Trump Administration has targeted the CFPB for severe cutbacks—attempting to lay off more than 1,400 Bureau employees. Those efforts have so far been blocked in federal court. Acting CFPB Director Russell Vought has expressed a preference that the Bureau be eliminated and said he is working toward that goal.

Democrats often say that the CFPB has returned $21 billion to consumers, but the CEA said that figure “severely” underestimates the broader burden on the financial system.

The CEA also said that:

• Annual paperwork requirements exceed 29 million hours. That is the equivalent of employing 14,000 full-time workers focusing on documentation and reporting. Between 2011 and 2024, the paperwork requirements cost businesses $21 billion.
• After adjusting for inflation, the CFPB has received $8.9 billion in transfers from the Federal Reserve from 2011 through 2024. “Because these funds would otherwise have flowed to the U.S. Treasury, the forgone revenue generates a marginal excess tax burden of $4.4 billion.” “Combined, the fiscal cost of the CFPB since its inception exceeds $13 billion.”
• “Broken down by loan type, the CFPB's rulemaking has cost consumers $116-$183 billion in higher mortgage costs ($1,100-$1,700 per originated loan), $32-$51 billion for auto loans ($91-$143 per loan), and $74-$116 billion for credit cards ($80-$126 per loan). “These costs significantly surpass the CFPB's reported $21 billion returned to consumers (about $15 per borrower).”

The Council also estimated that the higher borrowing costs from CFPB policies significantly reduced loan originations, resulting in an economic efficiency loss of between $1.5 billion to $5.7 billion to consumers.

We endorse the focus on the costs of the CFPB, which we do think have been understated, and the benefits of the CFPB, which we do think have been overstated, and have the following observations.

The reported $21 billion amount returned to consumers does not necessarily represent actual harm to consumers that was redressed through payments made by companies settling CFPB enforcement actions. Companies facing CFPB enforcement actions may reasonably believe they did nothing wrong, yet they elect to settle because it is the more efficient and cost-effective way of dealing with the matter.

With regard to mortgages, the report focuses on loans that did not qualify for the safe harbor under the original general qualified mortgage (QM) provisions of the Truth in Lending Act ability to repay rule because the consumer's debt-to-income (DTI) ratio exceeded the strict 43% cap that applied under the provisions. However, loans also could have been made under the QM commonly referred to as the “GSE Patch” if the loans (1) complied with the general QM loan characteristic prohibitions and points and fees limits, and (2) were eligible for sale to Fannie or Freddie. Both the DTI-based general QM and GSE Patch QM were available for loans with applications received before October 1, 2022. As a result of its greater flexibility, creditors typically relied much more on the GSE Patch QM than the DTI-based general QM. For loans with applications received on or after March 1, 2021, loans also could be made under the new general QM based on the loan's annual percentage rate. Finally, there were separate QMs for loans insured by the Federal Housing Administration and loans guaranteed by the Department of Veterans Affairs. Thus, the costs assumed by the CEA for loans that did not qualify for the original DTI-based general QM may not have materialized if the loans were QMs under one of the other QM provisions.

Consumer groups blasted the Administration.

The National Consumer Law Center accused the Administration of making “unfounded claims that consumers are paying billions to have their home and auto loans regulated.

“The White House continues to arm billionaires in their war on ordinary people's wallets,” said Diane Thompson, Deputy Director and Chief Advocacy officer at the National Consumer Law Center. “A functioning, effective Consumer Financial Protection Bureau is essential in safeguarding people from unscrupulous companies that prey on working families.” 

Americans for Financial Reform accused the Administration of using highly inflated compliance cost estimates without considering the enormous economic benefits of the CFPB to people and financial stability.

“The Trump administration has tried for over a year to shut down the CFPB because it worked tirelessly to protect people from junk fees, scams, and widespread financial harm as well as holding financial firms accountable for ripoffs and unfair practices,” said Tom Feltner, Associate Director of Consumer Policy at Americans for Financial Reform.  “It is not surprising that this administration is now claiming that people would be better off without the commonsense financial protections that have prevented another financial crisis for the past fifteen years.”

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