How Gutting the CFPB Will Hurt Rural America

 

Under the pretext of cutting costs and finding fraud, the new Department of Government Efficiency (DOGE), unofficially led by billionaire Elon Musk, has set out to dismantle an agency, ironically, tasked with protecting consumers from financial fraud: the Consumer Financial Protection Bureau.

Congress created the Consumer Financial Protection Bureau (CFPB) in the wake of the 2008 financial crisis, which was caused by predatory lending practices. The CFPB identifies and cracks down on scams and other unfair or deceptive tactics by financial corporations, such as payday lenders, banks, and credit card companies. Since its founding, the CFPB has returned more than $21 billion to consumers.

In early February, acting director of the CFPB, Russel Vought, told staff to stop working and coming into the office and fired about 200 probationary and term-limited staff (Vought is also a lead author of Project 2025 and the new director of the Office of Management and Budget). Musk’s DOGE team accessed internal CFPB computer systems and discussed firing nearly all of the CFPB’s 1,700 employees with senior agency leaders. The union representing CFPB employees sued to stop these layoffs, noting that Congress created this agency for a purpose and the White House does not have the constitutional authority to dismantle it.

“The scale of the ways in which people will be impacted economically is really overwhelming,” says Diane Standaert, a recently fired CFPB employee. “The likelihood is that people will experience higher bank fees or be swindled by predatory lenders. It will be easier for financial companies to take hard-earned money away from people. Having this happen at a time when it’s harder to make your dollar stretch feels particularly devastating.”

In a new report, Standaert and the HEAL Food Alliance highlight the many different ways that the loss of federal financial protections from the CFPB will harm rural communities and farmers, in particular.

“The CFPB has done so much to protect small farmers and rural communities over the years,” said Maleeka Manurasada, organizing director at HEAL Food Alliance. “Rural Americans are being left vulnerable to exploitation at a time when financial safeguards are most needed as communities struggle to make ends meet.”

Many CFPB rules affect all Americans, urban and rural, such fee limits. The CFPB capped credit card late fees at $8, down from a typical $32 fee. The CFPB also recently capped overdraft fees at $5 to save Americans an estimated $5 billion annually. However, implementing this new rule has been paused due to the CFPB work stoppage, and members of Congress are trying to repeal it under the Congressional Review Act.

A new rule to remove medical debt from credit reports is also in jeopardy. Unpaid medical bills are the largest source of debt collections in the U.S., but research by the CFPB found that outstanding medical bills are a poor predictor of people’s ability to repay other loans, thus it is not fair for credit reporting agencies to ding someone’s credit score for medical debt.

Rural Americans are more likely to have medical debt in their credit reports, according to CFPB research. The CFPB found that nearly 24% of rural Appalachians and 28% of rural Southerners have medical collections in their credit record, compared to 17% of people nationally. If this rule does not go through or is not enforced, many rural consumers will have a harder time applying for loans or credit simply because they got sick.

New CFPB leadership has also halted a long-awaited rule that requires small business lenders, including agricultural lenders, to share more basic data about their loan applications with the CFPB. The Dodd-Frank Act directed the CFPB to collect more data on small business lending decisions to identify potential patterns of discrimination. Manurasada says HEAL works with many farmers who experienced discrimination in commercial lending.

Limited analysis of federal lending and farmer surveys does suggest that farmers of color and women farmers receive disproportionately fewer farm loans than white, male farmers. These analyses do not cover the full picture of private lending, which fuels most of the farm economy. More data from private lenders will help policymakers and lenders identify and rectify farm credit disparities. That won’t happen if the CFPB cannot enforce this rule, or if new leadership simply opts not to.

Ongoing litigation against financial cheaters is also in limbo. Last week, the Trump administration moved to dismiss five major CFPB cases. One suit challenged the lending arm of Warren Buffet’s manufactured home company for originating mortgages for borrowers who clearly could not afford them. Many families struggled to make their payments and lost their homes, while Berkshire Hathaway’s businesses made money selling manufactured homes and collecting loan fees and penalties. Manufactured homes, or mobile homes, make up 13% of the housing stock in rural communities and they are one of the most affordable forms of housing available to low-income people.

Several reporters posit that the CFPB has been an early target of DOGE dismantling because the agency recently established that it has oversight over large non-bank payment apps, such as Venmo and PayPal. Eliminating this oversight would benefit DOGE leader Elon Musk, who has long said that he wants to turn his social media platform, X, into a peer-to-peer payment app and launched a partnership with Visa in January to get this started.

Without CFPB oversight, consumers who use non-bank payment apps will have little legal recourse to dispute errors or fraud or to get their money back if they lose access to their app. A growing segment of younger consumers use digital banks and non-bank fintech apps as their primary checking account, which includes some unbanked rural consumers who have lost local bank branches to consolidation.

Sadly, the attack on the CFPB is just one of many threats to rural Americans and farmers brought on by the Trump administration. Recent tariffs are sure to hurt agricultural exports and raise costs for farmers. USAID programs that bought roughly $2 billion of U.S. farm products annually are still on ice, despite successful legal challenges. USDA programs that build rural water, broadband, and energy infrastructure, as well as hundreds of farm support programs, are all threatened by the federal funding freeze. Plus, a slightly larger portion of rural and small-town households rely on federal food assistance (SNAP) than urban households, which Republicans hope to cut in their new budget, along with Medicaid.  

What We’re Reading

  • The CEO of Kroger, Rodney McMullen, resigned Monday following a board investigation into “certain personal conduct” reportedly “unrelated to the business.” (National Public Radio)

  • Some food companies have been diversifying their suppliers and building up inventories of products imported from Canada and Mexico in anticipation of tariffs that Trump implemented this week. But many still rely heavily on farms and production plants in Mexico and new tariffs will raise prices unless food corporations decide to eat the higher cost of imports. (New York Times)

 
PolicyClaire KellowayPrimary Feature, CFPB, discrimination, Debt