A top financial regulatory agency has been commanded to ease up on fintech and crypto industries.
By Veronica Riccobene, The Lever
Steering the country toward another potential financial crisis, the Trump administration has moved to completely gut the federal regulatory agency tasked with reining in the very financial institutions currently making the president’s allies rich.
The president’s attacks on the government’s financial regulator are a stunning about-face from 2016, when Trump first campaigned on reinstating tough banking regulations.
The Consumer Financial Protection Bureau (CFPB) was established in the wake of the 2008 financial collapse to protect Americans from abusive lending practices, supervise new financial products, and shore up the nation’s economic system.
During the Biden administration, the CFPB cracked down on junk fees, expanded its scope to include fintech and digital payments, investigated crypto firms for fraud and money laundering, and refunded more than $21 billion to defrauded consumers.
But last week, CFPB acting director Russell Vought announced the agency would be “shifting resources away from enforcement and supervision” and “deprioritizing” certain regulatory work it believes should be left to the states. The administration also tried to lay off nearly 90 percent of the CFPB’s staff, but was put on hold by a federal judge who said she was “deeply concerned” about the plan to summarily fire 1,500 of the bureau’s employees.
Trump is following in former President Bill Clinton’s footsteps, who first moved to substantially deregulate Wall Street in 1999. That year, Clinton passed the Financial Services Modernization Act, which allowed banks to integrate their services, invest in each other, and consolidate. Clinton also overturned the Glass-Steagall Act, a Depression-era law that prohibited banks from combining their commercial and investment banking activities. The result made big banks even bigger and may have helped cause the 2008 financial collapse.
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