White House Says CFPB Drove $350B in Extra Borrowing Costs

The White House Council of Economic Advisors (CEA) estimates that since 2011, the Consumer Financial Protection Bureau (CFPB) has cost consumers between $237 billion to $369 billion in, among other things, fiscal costs, increased borrowing expenses, and reduced originations.

In particular, the CEA finds that increased borrowing costs amount to at least $222 billion to $350 billion from the CFPB’s inception in 2011 through 2024.

The CFPB’s rulemaking has cost consumers $116 billion to $183 billion in higher mortgage costs, $32 billion to $51 billion for auto loans, and $74 billion to $116 billion for credit cards, according to the Council of Economic Advisors.  

Paperwork Costs at CFPB

The CEA also considered the annual paperwork costs for CFPB rules, which it estimated to be more than 29 million hours or the equivalent of 14,100 full-time employees with a cost of just under $2.5 billion. From 2011 to 2024, the CEA estimates paperwork costs for CFPB rules to be $21 billion. 

Consumer Advocates Push Back Against CEA Report

In a press release, the National Consumer Law Center (NCLC) defended the work of the CFPB and said the CEA had made unfounded claims that consumers are paying billions to have their loans, such as credit cards, mortgages, and auto loans, regulated.

“A functioning, effective Consumer Financial Protection Bureau is essential in safeguarding people from unscrupulous companies that prey on working families.” said Diane Thompson, Deputy Director and Chief Advocacy Officer at the National Consumer Law Center. 

What a Senate Committee Says About the CFPB

The NCLC also pointed to a Feb. 9 report from the Senate Committee on Banking, Housing and Urban Affairs Minority Staff. The report states the CFPB has returned $21 billion to Americans who had been cheated by giant corporations and big banks. 

The Senate report also states that President Trump’s efforts to shutter the CFPB has cost Americans $19 billion. The $19 billion figure was estimated using documents from the CFPB, other federal agencies as well as publicly available data. 

“Donald Trump promised to lower costs for Americans ‘On Day One.’ Instead, he is trying to shut down an agency that protects Americans from getting scammed out of their money by big banks and giant corporations,” said Sen. Elizabeth Warren (D-MA) in a press release.

“As a result, Trump’s attempt to sideline the CFPB has cost families billions of dollars over the last year alone. We’re going to keep fighting for the CFPB and against the billionaires who want to get rid of it.”

Inside the Senate CFPB Report 

Here is the data detailing the $19 billion estimated costs of President Trump’s efforts to shut down the CFPB from the Senate Committee on Banking, Housing, and Urban Affairs Minority Staff. Those efforts include:

• Permanently dismissing at least 22 enforcement actions that would have redressed more than $3.5 billion in alleged harm to consumers. 
• Dropping, reducing, or failing  to distribute payments from 23 settlements or consent orders against companies which cost consumers up to $225 million. 
• The Trump administration and Republican members in Congress rescinding CFPB rules and guidance that could have saved consumers as much as $15 billion in credit card late fees and overdraft fees.
• And gutting the consumer complaint program at the CFPB, which likely cost $40 million in direct relief to consumers, according to the Senate report.

What the CFPB Fight Means for Lenders

When lenders determine interest rates to charge consumers on lending products, they not only consider capital costs but also regulatory risks. A weakened or abandoned CFPB means less of a regulatory risk for lenders. This lower regulatory risk would affect the interest rates being charged to consumers as well as a lender’s profit margin.

In contrast, a robust or revitalized CFPB would mean more regulatory action from the bureau and greater regulatory risk for lenders. But that seems unlikely during President Trump’s term.

A bigger factor to consider is action by the Federal Reserve Board. The board’s decisions regarding interest rates impact lending and borrowing costs across financial products. Indeed, it would be fair to say that the Fed has a greater impact on lenders than what the CFPB does or doesn’t do. 

The Bottom Line

The White House Council of Economic Advisors estimates that since 2011, the Consumer Financial Protection Bureau cost consumers up to $369 billion.

But consumer advocates don’t agree with those figures. They point to a Senate report that states that President Trump’s efforts to close down the CFPB has cost consumers $19 billion.