Trump’s CFPB reset is welcome, but there’s a risk

President Donald Trump’s nomination of Stuart Levenbach to lead the Consumer Financial Protection Bureau has already drawn the predictable outrage from Sen. Elizabeth Warren (D-Mass.) and her allies. But for millions of Americans who rely on accessible, affordable financial products, the move represents something far more important: the beginning of the end of a decade-long regulatory experiment that punished consumers in the name of protecting them.

And it couldn’t come soon enough.

Under Rohit Chopra, the CFPB mutated from a financial regulator into a sprawling, ideological enforcement machine. It unnecessarily policed comparison-shopping tools. It went after digital platforms that weren’t even part of the financial sector. It regulated video game currencies. It launched crusades against legitimate financial products that ordinary families depend on to make ends meet. Chopra expanded the CFPB’s reach so far beyond its congressional mandate that dismantling the agency became a necessary act of consumer protection.

But after months of shutdown disruptions, mass layoffs and internal policy reversals, Acting Director Russell Vought has begun rolling back Chopra’s legacy with the urgency it deserves. The Levenbach nomination allows him to finish that work, and that alone is a win for American consumers.

Yet here is the hidden danger: even if Washington reins in the CFPB, the states are already racing ahead to build their own miniature versions of it.

And these new “mini-CFPBs” could be even more dangerous.

Across the country, state attorneys general and legislatures are seizing the opportunity to push aggressive, untested policies that the federal CFPB itself never dared pursue.

The latest development in Colorado’s DIDMCA opt-out case illustrates exactly how rapidly the regulatory landscape is shifting. As federal authority recedes, states are stepping forward with aggressive, conflicting rules that threaten to fracture the national credit market. On Nov. 10, the Tenth Circuit reversed the district court’s injunction blocking Colorado from enforcing its new usury limits against loans made by out-of-state, state-chartered banks.

Colorado’s opt-out will strip many state-chartered banks of their ability to “export” interest rates under DIDMCA, exposing them instead to Colorado’s rate caps, fee restrictions, and tiered structures whenever either the lender or borrower is located in the state.

Industry plaintiffs may still seek en banc review or Supreme Court intervention. But the direction is clear. Colorado’s move, covering APRs, origination fees, late fees, NSF fees, and other charges treated as “interest,” is a roadmap for other states considering similar opt-outs. National banks are unaffected, and business-purpose loans are excluded, but consumer credit could be reshaped dramatically.

New York’s FAIR Business Practices Act vastly expands “unfair and abusive” standards beyond federal norms. States are already filing lawsuits, like New York’s Attorney General Leticia James lawsuit against Zelle and its parent company. Illinois and California are writing their own pricing, disclosure and fee rules. Texas and others are drafting unique mandates on small-business finance, peer-to-peer payments, and medical debt reporting. In each case, regulators are less interested in protecting consumers than in expanding their own authority.

The result? A compliance maze so convoluted that it threatens to choke off financial access for the people who need it most.

Imagine 50 different definitions of “abusive.” Fifty different rules governing credit card fees. Fifty different enforcement priorities based on politics rather than policy. Fifty different compliance burdens for the same national financial product.

It’s a recipe for higher prices, fewer choices, slower innovation, and a balkanized financial system where your ZIP code determines your access to credit.

This moment has been long anticipated. “A single, even flawed, regulator is still more predictable than a swarm of competing state enforcers.” That prediction is now rapidly materializing.

When the CFPB consumed too much power, consumers suffered. But now that the federal watchdog is receding, we face a new threat: a regulatory vacuum being filled by ambitious state officials eager to score headlines, expand their fiefdoms, and punish the very innovators who make financial tools cheaper and more accessible.

This is the opposite of consumer protection.

President Trump’s reforms are a badly needed reset. The CFPB’s mission creep must end. Its assaults on innovation must stop. Its reckless data breach, which exposed the information of 256,000 Americans, should never be repeated. And its politicized enforcement culture should be replaced by a narrow, accountable focus on genuine fraud and abuse.

But the work cannot stop in Washington. Not if the states are determined to recreate the same regulatory excess 50 times over.

The Trump administration wants to restore affordability, expand access to credit and champion financial freedom. It must also shine a light on what is happening in state capitals where regulators wield sweeping powers with even less oversight than the federal CFPB ever had.

Consumers deserve protection, not paternalism. They deserve innovation, not bureaucracy. And they deserve a marketplace governed by clarity, not a patchwork of conflicting mandates that make financial opportunity harder to reach.

Rolling back Chopra’s CFPB overreach is an essential first step. But unless we confront the rise of state-level “mini CFPBs,” the next wave of financial regulation could be even more chaotic and far more costly than the last.

Patrick M. Brenner is the president of the Southwest Public Policy Institute, a nonprofit think tank.