The Government Accountability Office (GAO) has just released its report on reorganization efforts at the Consumer Financial Protection Bureau (CFPB). In response, Democratic members of key committees issued a press release with a headline announcing that the GAO report showed the “Huge Negative Impact of Trump Administration’s Dismantling of the Consumer Financial Protection Bureau.” The report shows no such thing.
The press release has a surreal feel to it. The GAO report offers a timeline of the Trump administration’s efforts to fire the bureau’s staff, drop enforcement actions, and revisit policies and rules. Nothing in it tells us anything about the impact on consumers. Implicit in the press release is the assumption that the CFPB’s past exercises in price regulation, investigative overreach, and statutory violations must have actually helped consumers simply because they were cloaked in rhetoric assuring the world that policymakers intended to help consumers. But no evidence is offered in support of this naive idea, and the belief that laws magically work as legislators intended stands as a perennial obstacle to the reform of broken policies.
The world is complex and laws often have unintended negative consequences. People react to every regulatory action. Price controls on financial services affect access to credit and complementary services. Never-ending investigations of legitimate firms redirect resources from customer service to lawyers and are especially hard on small firms. And as Justice Kentanji Brown Jackson has noted, the CFPB’s funding mechanism and structure were intended to make it unaccountable to Congress. The entire mess recalls the words of Charlie Munger: “Show me the incentive and I’ll show you the outcome.”
When there is complexity and a lack of accountability, policymakers should expect a gulf between the intention behind a law and its real-world effects. Unsurprisingly, Americans are increasingly aware that regulation can do more harm than good. A 2025 Associated Press–NORC poll found that many believe that there is too much government inefficiency (65 percent) and that bureaucracy is a problem (59 percent), even if they are skeptical of some Trump administration policies. Most Americans want financial regulators to protect consumers from fraud (64 percent) and ensure that financial institutions fulfill obligations to their account holders (53 percent), but there’s much less support for other proposed functions. Nonetheless, the CFPB has strayed outside these consumer protection lines and has failed to earn institutional trust.
Unfortunately, the Trump administration’s overhaul of the CFPB has not reformed any of the bureau’s statutory powers. Lasting change will require legislators’ support. Legislators willing to pay attention to evidence and incentives will best be able to contribute meaningful reform measures, satisfying voters and protecting consumers. Ultimately, the CFPB should be abolished and its consumer protection functions returned to the states and/or the Fedeal Trade Commission. Short of this fix, the CFPB should be redesigned to focus on concrete consumer harm, with more accountability to courts and Congress. Either way, no one benefits from pretending that the bureau has been a success.
