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Business Journals
5 days ago
- Business
- Business Journals
The CFPB isn't the only cop on the beat
In recent months, there has been growing concern that federal oversight of banks is eroding. Some critics point to legal challenges against the Consumer Financial Protection Bureau (CFPB) and suggest that consumers will be left unprotected as a result. These arguments have prompted calls for sweeping new state laws aimed at filling the so-called regulatory void. However, these calls rest on a false premise: that banks are no longer regulated. 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.
Newsweek
24-04-2025
- Business
- Newsweek
Trump Executive Order Raises Alarm Over Women's Financial Independence
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. An Executive Order (EO) signed by President Donald Trump is raising concerns over the protection of women's financial independence, as well as other potential civil rights violations. The EO, titled Restoring Equality of Opportunity and Meritocracy is intended to encourage "meritocracy and a colorblind society, not race- or sex-based favoritism." It calls for an evaluation of all pending proceedings under the Equal Credit Opportunity Act (ECOA), which was first passed in 1974 and amended in 1976 to prevent lenders from discriminating against women based on marital status. Although the EO cannot change the law, that can only be done by an act of Congress, if independent federal agencies abide by the order they will stall litigation protecting women from being discriminated against for credit, and they will roll back guidance and regulations which were in place to protect people's rights. President Donald Trump being handed an executive order by White House staff secretary Will Scharf in the Oval Office of the White House, Wednesday, April 23, 2025, in Washington. President Donald Trump being handed an executive order by White House staff secretary Will Scharf in the Oval Office of the White House, Wednesday, April 23, 2025, in Washington. Alex Brandon/AP Photo Why It Matters Prior to the ECOA, women could be asked to have a male relative or spouse co-sign for their credit cards or loans. President Trump cannot singlehandedly remove the ECOA, but his EO can make it harder for women to get federal help advocating against gender discrimination and can allow federally funded projects to discriminate based on gender. What To Know The EO's main target is the principle of disparate-impact liability, the idea that racism, sexism, or some other form of discrimination can occur without explicit intent. The President believes that disparate-impact liability is a key tool in a "pernicious movement" that "endangers" the U.S.' foundational principle of "creating opportunity, encouraging achievement, and sustaining the American Dream." Ben Olinsky, senior vice president of Structural Reform and Governance at the Center for American Progress (CAP), explained to Newsweek that disparate-impact liability is: "A recognition that you could have certain hiring practices that, while not, not clearly discriminatory in have a disproportionate impact on a particular protected class. "It could be where you advertise, for example, around employment listings. It could get at certain kinds of redlining practices." President Trump said: "[Disparate-impact liability] not only undermines our national values, but also runs contrary to equal protection under the law and, therefore, violates our Constitution." "They're trying to argue that it is somehow violating civil rights law and the Constitution to require employers or housing providers to consider the disparate impact on race or gender or age, right or disability," Olinsky told Newsweek. "Because that somehow might, in individual cases, cause a white young man to lose out because the criteria has been shifted." The ECOA is also intended to protect people of all races, color, age, and ability, creating concern that many groups could become subject to banking discrimination if federal agencies abide by this EO. Evaluation of the ECOA falls under section six of the EO, which Olinsky explained to Newsweek means: "To the extent that there have been any kinds of consent judgments or injunctions or orders that have already been put into government should revisit some of those agreements to see if maybe some can be rolled back." He explained that the order would likely result in the dismissal or quashing of any ongoing cases. The ECOA falls under the jurisdiction of the Consumer Financial Protection Bureau (CFPB). The CFPB is supposed to be an independent agency, but the Trump administration has been working to couple independent agencies with the White House. This move has resulted in several court cases; however, Trump has appointed his own head of the CFPB, which he is allowed to do, and this head will likely follow through on this Executive Order. President Donald Trump signiing executive orders in the Oval Office of the White House, Wednesday, April 23, 2025, in Washington. President Donald Trump signiing executive orders in the Oval Office of the White House, Wednesday, April 23, 2025, in Washington. Alex Brandon/AP Photo Not only does President Trump's order for "restoring equality" result in a reevaluation of judgments based around sex discrimination, it also calls for an evaluation of ongoing cases related to Titles VII, and VIII of the Civil Rights Act of 1964, and says: "the Attorney General shall initiate appropriate action to repeal or amend the implementing regulations for Title VI of the Civil Rights Act of 1964." Title VI prohibits federal funds from going to programs that discriminate against people based on their race, color, or national origin, Title VII prohibits employment discrimination, and Title VIII is also known as the Fair Housing Act which is intended to prevent housing discrimination. Olinsky stressed to Newsweek that this EO does not mean people cannot file private suits. There are still protections in place for women and other minorities, for example, lawsuits against private companies. However, without the federal government, there will be less data collection to aid people in understanding whether they were simply an individual denied a loan or if they were part of a discriminatory pattern, and there will be less support from agencies that are supposed to enforce, educate on, and regulate, federal civil rights laws. What People Are Saying Ben Olinsky, senior vice president of Structural Reform and Governance at the Center for American Progress told Newsweek: "You will see fewer to perhaps no effort by the federal government to make sure that women have equal access to credit, that Black people have equal access to credit. I think that will likely be a consequence." President Donald Trump, Executive Order: "Because of disparate-impact liability, employers cannot act in the best interests of the job applicant, the employer, and the American public. Disparate-impact liability imperils the effectiveness of civil rights laws by mandating, rather than proscribing, discrimination." What Happens Next Olinsky warned that the full legal consequence of this EO could come later, as these actions may work their way up to a Supreme Court case and to a bench that has shown it is willing to roll back Civil Rights Act protections in the name of equal opportunity, as demonstrated in Students for Fair Admissions vs Harvard.
