Michigan Officials Alarmed by Federal Efforts to Scale Back CFPB

Michigan Officials Sound Alarm Over Potential Weakening of Consumer Protection Bureau

In Michigan, there is growing concern over federal moves to potentially reduce the Consumer Financial Protection Bureau’s (CFPB) power, an agency established post-2008 to guard against predatory financial practices.

Michigan’s Attorney General, Dana Nessel, emphasized the importance of the CFPB in supporting state-level efforts against bad actors in the financial world. “It’s really critical that we have those partnerships due to our limitation on resources, jurisdictional issues, and many other reasons that we count on the federal agencies to assist us,” Nessel stated during a press briefing.

Nessel’s concerns also stem from a perceived weakening of Michigan’s Consumer Protection Act following state Supreme Court decisions in 1999 and 2007. Her office is currently advocating for the restoration of some of these powers in an ongoing Michigan Supreme Court case. Parallelly, Democratic lawmakers are preparing to reintroduce proposals aimed at fortifying consumer protection laws, despite past legislative setbacks.

Meanwhile, the CFPB remains a pivotal ally for Michigan in bridging regulatory gaps. Former CFPB Director Rohit Chopra pointed out that state-level probes cannot substitute for federal investigations into major financial entities like Capital One and Wells Fargo. The bureau had recently dropped investigations into these institutions after President Donald Trump’s return to office, as reported here and here.

Chopra remarked in Lansing, “The law does not really give the states the ability to prosecute fully those big national banks. And, on top of that, federal law enforcement helps get money back for everybody. I don’t know if it’s so efficient for there to be 50 different lawsuits against those firms or 50 different investigations.”

Since Trump resumed office, significant changes at the CFPB have included Chopra’s dismissal and efforts to reduce the bureau’s activities, alongside attempts to release numerous staff members, as detailed here.

While some financial institutions and economists criticize the CFPB for being excessively strict and lacking sufficient oversight, Nessel and others continue to highlight its essential role in consumer protection.