States Step Up to Protect Consumers as Trump Weakens Federal Watchdog

States Step Up to Protect Consumers as Trump Weakens Federal Watchdog

State legislators are taking action to bolster consumer protections in response to Donald Trump's decision to close down the federal Consumer Financial Protection Bureau (CFPB) and impose hefty tariffs on foreign trade partners. Officials in states like Massachusetts and Illinois are particularly concerned about the impact this will have on vulnerable consumers, including veterans and the elderly.

Established in 2010 by Senator Elizabeth Warren, the CFPB was tasked with monitoring credit card companies, mortgage providers, debt collectors, and other segments of the consumer finance industry. It created and enforced rules to protect consumers from unfair, deceptive, or abusive practices.

However, the Trump administration has targeted the CFPB, claiming the independent agency, funded by the Federal Reserve System, lacks sufficient oversight and regularly exceeds its regulatory authority. Last month, Russell Vought, the newly installed director of the Office of Management and Budget, ordered the CFPB to halt its investigations and work on proposed rules. He also instructed the agency to suspend the enforcement dates of any finalized rules and closed the CFPB's offices for a week.

This move has sparked concern among state officials who fear the weakening of the CFPB will leave vulnerable consumers exposed. At a recent forum, Massachusetts Attorney General Andrea Joy Campbell called the situation "a national emergency" and said some states were "stepping away wholeheartedly" from protecting their own consumers.

Illinois state Senator Mark Walker, who was already working on consumer protection legislation, emphasized the urgency of the situation. "They apparently closed the doors and put everyone on leave," he said. "And I think it's become critical now that we figure out exactly what we do to respond to these kinds of issues that consumers in Illinois have."

In response to the Trump administration's actions, 23 states and the District of Columbia have filed a lawsuit challenging the defunding of the CFPB. They argue that losing the CFPB's services will cause irreparable harm, including the loss of consumer complaint processing, data collection, and distribution of funds to harmed consumers.

Prior to Trump's return to office, the CFPB released guidance on how states could strengthen their own consumer protections. This guidance highlighted existing ways in which states could enforce federal rules. The report stated, "Federal law should be a floor, not a ceiling, for the protection of consumers."

As the Trump administration weakens the CFPB, states are stepping up to fill the void and ensure that consumers are protected from unfair and abusive practices.