Three questions for former CFPB Deputy Director Raj Date
Earlier this month, Department of Government Efficiency (DOGE) czar Elon Musk declared, with his usual subtlety, “CFPB RIP ?.” And indeed, the Consumer Financial Protection Bureau (CFPB) is teetering on the edge of irrelevance. Russ Vought, the acting CFPB Director and architect of Project 2025 for President Donald Trump’s second act, has issued a curious directive: employees are now prohibited from performing “any work tasks.” The court filings are a masterclass in understatement, assuring that the CFPB will “continue to exist” – albeit in a leaner, more “efficient” form. Translation: the body may lurch on in zombie-like fashion, devoid of purpose or agency.
To make sense of this unfolding debacle, Fintech Nexus turned to Raj Date, the first Deputy Director of the CFPB, who steered the agency through its infancy and knows a thing or two about the bureaucratic beast in question.
In your view, what happens to the CFPB’s mandate if it’s successfully shut down, despite legal efforts to prevent that? Can the CFPB’s purview live on through the work of other government entities (Treasury, a different part of the Fed, etc.)?
There are pretty compelling arguments that the President can’t just “shut down” a congressionally mandated agency on a whim. This is still a democracy, and one man can’t just ignore the will of the people, as expressed by their elected representatives in Congress. But if the CFPB were shut down by the Trump/Musk administration anyway, I would be deeply skeptical that other federal agencies could just step into the void, at least not in a meaningful way. For example, Congress explicitly took consumer finance rule-writing authority away from the Federal Reserve when it created the CFPB. If Musk shut down the CFPB it would not magically reincarnate that rule-writing authority at the Fed.
On the other hand, I would very much expect the leading state regulators and attorneys general — California and New York chief among them — to try to step up enforcement activity across the sector. The irony here is that we would be trading a single agency’s regulatory authority, under the stewardship of an eminently Senate-confirmable Republican nominee in Jonathan McKernan, into a hodgepodge of state-driven regulation, where the main states leading the charge would almost certainly be deep-blue California and New York.
The irony here is that we would be trading a single agency’s regulatory authority, under the stewardship of an eminently Senate-confirmable Republican nominee in Jonathan McKernan, into a hodgepodge of state-driven regulation, where the main states leading the charge would almost certainly be deep-blue California and New York.
Raj Date
How would the dismantling of the CFPB affect fintech? Among other concerns, what happens to open-banking efforts and regulations if its enforcement arm no longer exists?
The CFPB’s demise would have near-term, medium-term, and long-term impacts on fintech — almost none of them positive. Over the near-term, no one would have the authority to provide guidance, amendment, and enforcement on important policy levers that enable fintech success — the recently finalized section 1033 open banking rule chief among them.
Over the medium term, the only meaningful federal consumer protection supervisory presence, in the absence of the CFPB, would be the depository regulators (the Federal Reserve, the OCC, the NCUA, and the FDIC), which almost by definition are not hyper-focused on non-depositories like fintechs. So one should expect medium-term policy-making to center on what matters for banks, not fintechs.
And over the long term, it’s important to realize that without the CFPB, literally no one has the authority to supervise large banks’ compliance with consumer finance regulation. No one. And over time that is likely to be a disaster for anyone trying to compete with large banks — whether smaller banks (which are supervised by the bank agencies, not the CFPB) or fintechs.
Regardless of the CFPB’s ultimate status (i.e., shut down or not), what role, if any, should fintechs and financial institutions play in sustaining the CFPB’s mission? Do they have an interest in doing so?
The industry has found itself in a bit of a no man’s land. It has, through a decade-plus of well-funded hyperbole, convinced the Trump/Musk contingent that it would celebrate the demise of the CFPB. But it has done precious little to successfully persuade a filibuster-proof congressional majority that it should simply replace a politically popular agency.
So now the industry finds itself in the worst possible situation: It is on the precipice of shutting down an agency that creates a uniform, level playing field across the country, and replacing it with a patchwork of state regulation and chaos. There are certainly firms that would thrive in that chaos — Musk’s own Twitter/X’s payments aspirations would certainly benefit — but traditional financial institutions do not thrive amidst chaos.
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Raj Date is the Managing Partner of Fenway Summer LLC, a Washington DC-based venture investment firm focused on the financial services sector. He is also the co-founder of FS Vector, an advisory firm that counsels financial services companies on regulatory strategy, compliance, and public policy.
Date was the first-ever Deputy Director of the U.S. Consumer Financial Protection Bureau (CFPB). As the Bureau’s second-ranking official, he helped steward the CFPB’s strategy, its operations, and its policy agenda. He also served on the senior staff committee of the Financial
Stability Oversight Council, and as a statutory deputy to the FDIC Board. Before being appointed Deputy Director, Date acted as the interim leader of the new agency, serving as the Special Advisor to the Secretary of the Treasury. He led the CFPB for most of the first six months after its launch.
Date serves on the boards of directors of a number of innovative firms, including Circle, the digital asset infrastructure firm, and Customers Bank, the technology-forward commercial bank. He also serves on the Board of Trustees for Third Way, a nonprofit think tank.
