The CFPB isn't the only cop on the beat
The reality is very different. Banks remain among the most heavily regulated industries in the country, subject to a rigorous framework of federal and state oversight that governs nearly every aspect of their operations. Even without an empowered CFPB, banks are still held accountable by other federal regulators, including the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board. These agencies conduct regular safety, soundness, and consumer compliance exams—and have full authority to investigate and enforce violations of law.
Importantly, the underlying consumer protection statutes that define fair lending, accurate credit reporting, data privacy, and responsible disclosures remain intact. Laws like the Truth in Lending Act (TILA), Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), and Gramm-Leach-Bliley Act (GLBA) are still the law of the land. And those laws don't go away when political winds shift. They are enforced through multiple channels: federal prudential regulators, state attorneys general, and even private litigation.
And while the CFPB may be downsized under the current administration, that is far from permanent. A future president could restore the agency's rulemaking and enforcement agenda, just as quickly as it was paused. In fact, the CFPB has proven to be highly responsive to shifts in political leadership. That means any state laws designed to 'fill a gap' in federal oversight could soon become duplicative, inconsistent, or even counterproductive—especially if federal enforcement ramps up again under new leadership.
Put simply, a diminished CFPB does not dismantle the rulebook. Banks continue to follow these rules, and regulators continue to enforce them.
Nevertheless, some state lawmakers are using the CFPB's challenges as justification for imposing expansive new compliance obligations at the state level. These efforts are often well-intentioned—but they frequently overlook the complex, layered regulatory regime that banks already operate within. Applying a one-size-fits-all set of rules to all industries—regardless of whether they are already federally supervised—risks doing more harm than good.
Unlike unregulated tech platforms or data brokers, banks are subject to mandatory, periodic examinations and must demonstrate compliance with federal standards year-round. New state-level rules that duplicate or conflict with federal mandates not only create confusion, but can also drive up compliance costs, discourage innovation, and impact the cost of credit.
The real risk is not under-regulation, but misregulation: creating an unstable patchwork of conflicting state and federal rules that impose new burdens without materially improving consumer outcomes.
Banks don't fear oversight—they expect it. But they do value clarity and consistency. While the CFPB's future may be uncertain in the short term, the rest of the regulatory system is not. State policymakers should keep that in mind before rushing to fill a gap that doesn't actually exist—and that could soon close on its own.
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