Elon Musk, the head of the Department of Government Efficiency and a champion of deregulation in the banking industry, stepped away from the agency late last month — deepening the rift between him and the Trump administration.
While President Donald Trump has been pegged as the architect of efforts to pick apart the
"I am pleased to announce that the Great Elon Musk, working in conjunction with American Patriot Vivek Ramaswamy, will lead the Department of Government Efficiency ('DOGE'). … Together, these two wonderful Americans will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures and restructure Federal Agencies — Essential to the 'Save America' Movement," Trump said in a Nov. 12
Following Musk's departure and breakaway from the administration's messaging, bankers are wondering who will head the agency in his place.
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The
Under the tenures of Treasury Secretary Scott Bessent and current acting Director Russell Vought, the bureau has navigated waves of
Robin Dull, senior director at advisory and investment firm Klaros Group, predicted that the loss of Musk would slow "much of DOGE's fraud, waste and abuse initiative[s]."
"The prudential regulators are likely to take a more measured approach to regulatory change, which is generally consistent with what we've already seen in this administration," Dull said. "But the CFPB will continue to be a shell of an agency, at least in the near term; it may not even have the staff to conduct agency actions that are required by law."
CFPB policy moves have been widespread, but others say that on a whole, core regulations and guidance for banks is for the most part intact.
"CFPB driven regulations around things like overdraft fees ... are gone," said David Maya, senior managing director at Accenture and leader of the firm's finance risk compliance practice in North America. "Regulations that have been in place since the global financial crisis through Dodd-Frank mostly remain in place."
Policy experts remain determined that regardless of who leads DOGE, the larger legislative shifts at work are only the beginning.
Kathryn Judge, the Harvey J. Goldschmid professor of law at Columbia Law School, said that while the "early stages of the deregulatory turn" the U.S. is in have featured "settling or dismissing pending enforcement actions, proclaiming an intent not to enforce certain laws and attempts to dismantle regulatory bodies," not much has changed for banks.
"None of that actually reduces a financial institution's duties under existing law, and there always remains a risk that a future administration will take a different approach to enforcement," Judge said. "The process of changing the rules takes more work. If a rule went through a notice-and-comment process when it was adopted, any revision or revocation has to go through that same process. That is the process that is just getting started."
Others like Michael Ohlrogge, professor at New York University's School of Law whose research specializes in bankruptcy, financial regulation and corporate governance, said that when it comes to historical precedents for times of banking deregulation, the leadup to the savings and loan crisis in the 1980s comes to mind.
"Supervision was cut back, regulations loosened, new activities and investments allowed, all occurring at a time when banks and thrifts were already in a poorly capitalized position," Ohlrogge said. "At this point, the regulatory and supervisory changes that have been made aren't as substantial as we saw in the 1980s, but it's early in this new administration so it's hard to say how extreme the de-regulation and de-supervision may get."
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Here's a review of how Musk's influence on the banking industry stirred up a mix of optimism and worries from changemakers and executives alike.
Musk breaks from Trump administration, leaving regulators in limbo
Elon Musk said in May that he would step away from his role at the Department of Government Efficiency as part of a growing rift with the Trump administration, leaving the campaign to cull federal spending up in the air.
During his tenure assisting DOGE, despite attestations from the Justice Department that he was no more than a special government employee, Musk had a hand in mass layoffs and spending cuts at the CFPB, the Internal Revenue Service, the National Credit Union Administration and other federal agencies.
His departure followed a statement critiquing the aim of Trump's spending and taxation bill and saying the cost to get it off the ground "undermines the work that the DOGE team is doing."
"I was disappointed to see the massive spending bill, frankly," Musk said in an interview with CBS Sunday Morning.
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Union to CFPB employees: Musk isn't your boss
Leaders of the National Treasury Employees Union instructed federal employees to disregard a February email from the Office of Personnel Management, demanding they list five accomplishments or risk losing their jobs.
Directives from the union told CFPB employees to listen instead to direct supervisors and clarified that "soliciting this information from employees is an unfair labor practice under federal law and a violation of your collective bargaining rights," according to emails obtained by American Banker.
Furthermore, the NTEU instructed federal employees to respond instead with a list of all the tasks they were
Accompanying the achievement email, Musk
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Experts feared CFPB direction was steered in part by Musk
A short time after Bessent was named acting director of the CFPB, almost everything from rulemakings and enforcement actions to supervision was put on hold, including new nonbank entities.
Market experts worried that the CFPB's direction away from supervising nonbanks purposefully coincided with the
"The actions of Musk and his DOGE operation at CFPB in accessing confidential agency data, along with Vought's efforts to gut the agency and prevent additional nonbank regulation, raise huge conflict of interest issues, which in normal circumstances would cause a national uproar," Todd Baker, a senior fellow at the Richman Center for Business, Law & Public Policy at Columbia Business School and Columbia Law School, told American Banker.
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Government watchdogs sniff out DOGE's Treasury inquest
Employees of DOGE gained controversial access to sensitive federal payment systems within the Treasury Department in February, spurring the Government Accountability Office and the Treasury's inspector general into action.
Both offices informed Sens. Elizabeth Warren, D-Mass., the ranking member of the Senate Banking Committee, and Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee, that the investigations would seek to confirm or deny allegations of improper payments as well as review security controls in place for the Treasury's payment system.
"It is unclear why Musk and unknown individuals on his team were granted unfettered access to this information, and what protections are in place to ensure Americans' privacy is protected," Warren and Wyden said in their letter to the GAO. "With access to these critical systems, Musk, DOGE employees, or others in the Trump Administration could use this as a cover to unilaterally restrict or defund programs Americans rely on."
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Armed with CFPB data, Musk could have advantage over competitors
In gaining access to both Treasury and CFPB data, Warren and other changemakers worried that Musk could unfairly use those insights to fuel the development of X Money.
Warren's main argument centered on the conflict between DOGE's deregulatory campaigns and X's development of a consumer payment product, which she said contains little to prevent Musk from using that data outside of government-approved purposes. Warren is credited with the
"No one has been able to independently verify what information they've got and what they've done with that information," Warren said in response to a question from American Banker following a Senate Banking Committee hearing.
Thus far, there has been no evidence that Musk has used government data for his business. In February, he responded
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