Why the Oligarchs Dislike the CFPB
It's easier to make money from questionable schemes if there aren't any guardrails
A tweet by Elon the Oligarch about “deleting” the Consumer Financial Protection Bureau (CFPB) caused a stir as consumer advocates and tech bros alike pondered life without this consumer champion.
Jason Mikula at Fintech Business Weekly digs deep into why Musk and other oligarchs and their sympathizers want to see an agency that has returned $19 billion to consumers to just disappear.
(Ok, it’s because of the $19 billion. These guys want it to be easier to keep the money they gain from questionably legal schemes).
During his wide-ranging discussion with Rogan about the consumer protection regulator and the topic of debanking, Andreessen neglects to mention how his investment firm, Andreessen Horowitz, popularly known as a16z, and its portfolio companies — a number of which have engaged in questionable practices — stand to benefit from a lighter-touch approach to regulation.
As Mikula notes, criticism from the oligarchy is not exactly based on reality - but it IS based on a desire to make big piles of cash without being stopped by pesky regulations designed to protect consumers:
Andreessen’s antipathy toward the CFPB seems to be grounded in his belief that, in his words, it “terrorizes” financial institutions, discouraging “anyone who wants to do anything new in financial services” — including the many fintech and crypto companies Andreessen’s firm has invested in — in order to, Andreessen argues, prevent competition with “the big banks.”
It’s hard to reconcile Andreessen’s characterization of the CFPB as “protecting” big banks from the competitive threat posed by fintech and crypto when, of all of the federal agencies involved with overseeing financial services, the CFPB is arguably the most explicitly vocal about promoting competition.
So, yes, deleting CFPB would help the already very rich get even richer.
However, it would also stop good news stories like victims of a giant credit repair scam getting $1.8 billion in refunds.
A pair of affiliated credit repair firms broke the law by charging customers illegal fees before delivering results. Now, victims of the scheme used by Lexington Law and CreditRepair.com will receive a total of $1.8 billion in repayments.
4.3 million customers were taken in by this scam. Customers seeking credit repair. Customers in fairly desperate situations.
But Musk and his oligarch buddies aren’t concerned about that. They seem to just want streets already paved with gold to be plated with platinum.
Some examples of CFPB success include:
Navy Federal Customers Receive $80 Million in Refunds
“Navy Federal illegally harvested tens of millions of dollars in junk fees, including from active duty servicemembers and veterans,” said CFPB Director Rohit Chopra.
KMart, Sears Customers Receive $191 Million in Refunds
A financing company that facilitated rent-to-own or lease-purchase agreements at major retailers including Sears and Kmart has been banned from doing business. Additionally, $191 million will be distributed to consumers harmed by deceptive and illegal contracts.
Apple, Goldman Sachs Fined $89 Million
Climb Credit Sued for Deceiving Student Borrowers
The lawsuit claims that Climb represented to student borrowers that it had vetted potential schools for job placement rate and average starting salaries. The reality, according to CFPB, is that Climb either ignored bad outcomes of partner schools or failed to analyze them at all.