Protests erupt after CFPB operations halted by acting director

Summary

Companies

Acting director Vought tells CFPB staff to halt work

Musk's department gains access to CFPB systems, halts oversight

White House calls the CFPB "weaponized bureaucracy"

Democrats rally against shutdown, saying consumers are at risk

WASHINGTON, Feb 10 (Reuters) - Hundreds of protesters gathered outside the office of the U.S. Consumer Financial Protection Bureau on Monday after President Donald Trump's newly installed chief of the consumer watchdog told all of the agency's staff to stay away from the office.

Demonstrators gathered in a courtyard outside the CFPB's headquarters near the White House, chanting slogans like "Let us work," and "Who are we? CFPB! What do we do? Work for you!"

The consumer watchdog has served as a critical safeguard for consumers, reaping billions in repaid funds to wronged parties, its backers say.

But the financial industry and Republican lawmakers have griped the CFPB is too powerful and lacks accountability.

The latest move on the watchdog followed a weekend decision to shutter the CFPB's Washington headquarters, idling a federal agency of nearly 2,000 workers tasked with enforcing consumer financial laws.

"Employees should not come into the office," acting CFPB Director Russell Vought said in an email to all staff. "Please do not perform any work tasks."

U.S. Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee who helped set up the agency, said at the protest that the CFPB "caught the crooks and made them give back, so far, $21 billion."

Vought, a longtime budget hawk, took control of the agency on Friday. He is the architect of the right-wing policy manifesto known as Project 2025, which called for the CFPB's abolition.

Efforts by President Donald Trump's administration to neutralize the agency escalated over the weekend as billionaire Elon Musk's Department of Government Efficiency gained full access to CFPB computer systems. Vought ordered a stop to all oversight of consumer financial companies.

Musk has vowed to destroy the CFPB and on Friday posted "CFPB RIP" on his social media platform X. The agency would be responsible for regulating his planned business venture with payments giant Visa.

The White House said in a statement the CFPB has long functioned as another "woke, weaponized arm of the bureaucracy that leverages its power against certain industries and individuals disfavored by so-called elites."

It added, "the weaponization ends right now."

The protests continued on Monday evening with a rally of staff, Democratic lawmakers and progressive organizations gathered outside the agency's headquarters near the White House.

The National Treasury Employees Union, which represents CFPB staff, filed a federal lawsuit on Sunday, arguing that Vought's actions violated the Constitution by undercutting the U.S. Congress' power to set and fund the agency's mission.

The CFPB was created as part of the sweeping 2010 Dodd-Frank financial reform law that sought to ensure a sole agency was charged with monitoring the financial wellbeing of consumers.

The agency does not receive direct funding from Congress, but rather requests its budget from the Federal Reserve. Vought has already said he intends to seek no new funding for the CFPB, which currently has cash reserves of over $700 million.

U.S. Representative Maxine Waters, the top Democrat on the House Financial Services Committee, joined Warren and the protesters in front of the CFPB's headquarters.

Efforts to undermine the CFPB put consumers at risk of falling victim to fraud and scams and other abusive financial industry practices, non-profit organization Consumer Reports warned.

"The administration's latest efforts to halt activity at the CFPB makes clear that they are intent on effectively shutting it down for the next four years," said Delicia Hand, senior director, digital marketplace, at Consumer Reports in an email.

Bank stocks underperformed the broader market index (.SPX), opens new tab on Monday, with S&P 500 bank index (.SPXBK), opens new tab down 1.9% in afternoon trade.

Synchrony Financial (SYF.N), opens new tab Chief Financial Officer Brian Wenzel said the company has not changed the way it interacts with the CFPB so far.

"We are keeping our head down," he told a financial conference on Monday. "We have a lot of respect for the CFPB. We will continue to deal with them; it's business as usual."

Complaints against the CFPB escalated under its most recent Democratic director, Rohit Chopra, whom they said tested the boundaries of legal activity at the agency with his aggressive policing of the financial sector.

"It is likely that recent CFPB rulemakings on fees get rolled back, although they were not yet implemented, so status quo for consumers," said Christopher Wolfe, head of North American banks at rating agency Fitch.

"The CFPB has been a political football almost since its inception and looks like that will remain the case."

Reporting by Douglas Gillison; Additional reporting by Tatiana Bautzer, Hannah Lang, Saeed Azhar and Pete Schroeder; Editing by Louise Heavens, Peter Graff, Lananh Nguyen, Andrea Ricci, David Gregorio and Sandra Maler