Sens. Elizabeth Warren, D-Mass., center, Amy Klobuchar, D-Minn., and Senate Minority Leader Charles Schumer, D-N.Y., conduct a news conference after the Senate Policy luncheons in the Capitol, March 14, 2017.
Tom Williams | CQ Roll Call | Getty Images
Democrat lawmakers led by Massachusetts Sen. Elizabeth Warren on Tuesday held a forum pushing back against the moves that the Trump administration and Elon Musk have taken to neutralize the Consumer Financial Protection Bureau.
Guests at the event included a retired military veteran helped by the agency, a mortgage broker who said the CFPB has helped curb industry abuses, and the bureau’s former head for supervision.
But the focus of the senators’ attention was Elon Musk, the driving force behind the so-called Department of Government Efficiency. While Musk was invited to the Washington, D.C, event, according to Warren, he didn’t make an appearance.
The lawmakers questioned whether Musk was conflicted in his efforts to dismantle the CFPB, highlighting his recent plan to launch a digital payments service within X, the social media network he owns.
“By seizing control of the agency, Musk can now root through all of the CFPB’s confidential data that DOGE has accessed on these potential competitors,” Warren said. “As Musk launches his new app, he faces oversight from the CFPB. His plan seems to be to eliminate the watchdog.”
A representative for Musk and X didn’t immediately respond to request for comment.
Earlier this month, operatives from DOGE gained access to CFPB systems, shortly before the bureau’s new leadership shuttered the agency’s headquarters, froze nearly all activities and laid off roughly 200 employees. A CFPB union has alleged in a lawsuit that acting CFPB Director Russell Vought intends to fire more than 95% of the agency’s staff.
“Elon, how do you justify shutting down the agency that’s going to be looking at your peer-to-peer payment plan?” Sen. Amy Klobuchar, D.-Minn., asked rhetorically during the hearing Tuesday. “How do you justify shutting down the agency that has jurisdiction and oversight over many of the other financial issues that you are going to make money from doing?”
‘Secret sauce’
Responding to a question from Sen. Chris Van Hollen, D.-Md., about what Musk could do with CFPB data, Lorelei Salas, the former CFPB supervision director, said the regulator kept “very sensitive trade secret information,” including from payments services PayPal, CashApp and Zelle, as well as online lenders.
“We’ve been looking at a number of digital wallet companies, payments companies, and we have information… on the technologies that they’re using,” Salas said. “We have information on the secret sauce of the credit models that people used with artificial intelligence to make decisions about whether you get a loan or not.”
Late last year, the CFPB took steps to supervise tech giants and payments firms that dominate the market, including Apple and PayPal, and sued the operator of the Zelle payments network and the three biggest U.S. banks using it for allegedly failing to properly investigate fraud complaints.
Besides confidential data on companies examined by the CFPB, the agency has “very sensitive data” from consumers filing complaints, Salas added. Consumers often leave account numbers and other personal data in their complaints, agency sources have said.
Now, with the CFPB and its employees in a state of limbo, the question is how far Musk and Vought can take their campaign to minimize the watchdog. A federal judge has halted their efforts, saying that they cannot fire employees or purge bureau data for the time being.
“The CFPB has been sidelined, but it is not dead,” Warren said, asserting that only Congress can shut down the bureau. “Advocates are in court right now asking judges to enforce the law, and I am confident they are going to win.”
