White House report says CFPB raised borrowing costs

• Key insight: A report from the White House Council of Economic Advisers claimed that the Consumer Financial Protection Bureau's rules raised consumer interest rates and reduced the availability of credit since its inception.
• Supporting data: The report says the agency's actions raised consumers' borrowing costs by between $237 to $369 billion over the 13 years between 2011 and 2024.
• Forward look: The report comes amid the Trump administration's ongoing efforts to radically downsize the agency. 

The White House's Council of Economic Advisers on Tuesday issued a report arguing the Consumer Financial Protection Bureau has raised consumer costs by hundreds of billions of dollars since its inception following the 2008 financial crisis. 

The CEA report said the CFPB has cost consumers between $237 billion and $369 billion between its establishment in 2011 and 2024, reducing credit availability through the higher legal and compliance costs on lenders. The report's conclusions have been disputed by a number of consumer groups and financial regulatory experts, who say the methodology and assumptions in the report paint an incomplete picture of the agency 's impact.

The administration says CFPB regulation increased legal and compliance risk for firms, which ultimately raises the cost of borrowing, through higher interest rates and more selective loan approvals. 

The CEA analyzed the effect of two important CFPB rules issued in the wake of the 2008 crisis: the Qualified Mortgage rule and the "ability-to-repay" portion of that rule, which were both finalized in 2013. The QM rule was later revised in 2020. The CFPB was charged as part of the Dodd-Frank Act to eliminate mortgage features that contributed to the subprime mortgage crisis, establishing the QM rule to codify those changes and requiring originators to assess the borrower's ability to repay. In their report, the CEA says borrowers whose debt-to-income ratio falls above the 43% threshold laid out in the rule carried interest rates roughly 16 basis points, or 4.3%, higher than comparable loans that fell below the CFPB's standard. 

The ability to repay rule requires lenders to report and verify consumer income, outstanding debt, employment status among other factors to ensure the borrower can afford a loan. Loans that meet the qualified mortgage standard are shielded from borrower lawsuits, while those above the threshold can face litigation. 

According to the White House, borrowers paid between $116 billion and $183 billion more in mortgage costs, between $32 billion and $51 billion more for auto loans and $74 billion to $116 billion more for credit card loans. Acknowledging the CFPB's self-reported roughly $21 billion in consumer restitution, the report claims the added cost of borrowing more than offsets the benefits of the CFPB rules. 

Higher borrowing costs also reduced lending volume, according to the report, which estimates there was between $1.5 billion and $5.7 billion in lost lending volume over the period studied.

The report goes on to say that CFPB requirements generate about 29 million hours of paperwork a year, along with $21 billion in compliance costs since 2011.

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The report also says the CFPB under the Biden administration suffered from mission-drift without adequate administrative procedure. 

"By inappropriately utilizing bulletins, guidance documents, and its enforcement authority in the place of formal rulemaking, the CFPB's regulatory scope extends beyond the bounds of the APA and its statutory obligations," the CEA says. "Former CFPB Director Rohit Chopra advocated a policy of capping the size or growth of business assets, prohibiting certain types of business practices, and requiring divestitures of certain product lines, recommendations that are often far outside the statutory scope of the Bureau."

Consumer advocates and academic critics disputed the White House's findings, saying the report ignores consumer benefits and rests on flawed assumptions.

Graciela Aponte-Diaz of the Center for Responsible Lending said there is a "glaring omission in the report," which is the oversight of the agency's founding mission. 

"The [CFPB] has saved Americans trillions of dollars by protecting them from financial exploitation and providing guardrails that keep predatory lenders from creating a repeat of the catastrophic 2008 Financial Crisis," she wrote in a statement in response to the report. "Top U.S. banks posted record profits in 2024 — they're doing just fine. … [CFPB's] work must continue, regardless of the administration's repeated attempts to dismantle the agency."

Adam Rust, the Consumer Federation of America's director of financial services, said the report ignores post-crisis improvements in lending markets and that consumer finance markets have become safer, more transparent and less risky since the CFPB's creation.

"During the Great Recession, millions of Americans lost their homes, their jobs, and their life savings," wrote Rust in a statement. "Consumers have benefited from the CFPB's work to reduce fees, prevent debt traps, and put the brakes on predatory financial practices, on top of delivering more than $20 billion in direct relief."

Rust also pointed to an 87% decline in foreclosure filings after post-crisis mortgage rules, and a 2016 CFPB study estimating the Credit CARD Act saved consumers $16 billion in fees. Rust also noted that agency data indicates that overdraft fees dropped from $12 billion in 2019 to under $6 billion in 2023.

Georgetown law professor Adam Levitin said in a blog post that the report contained "shoddy legal and economic analysis" and called the core premise incorrect, saying the bureau has not expanded its statutory authority.

"The CFPB has not 'expanded' its jurisdiction an iota since its inception in 2011 — and it cannot. Its jurisdiction is fixed by statute and has always extended to all consumer credit markets," Levitin wrote in a blog post. "The only possible argument here is that the CFPB has designated some firms as 'larger participants' in their markets, making them subject to examination, but that's just utilizing existing jurisdiction, not "expanding" it. If you've got a beef with CFPB jurisdiction, take it up with Congress."

Levitin also countered the White House's mortgage analysis underpinning the estimates in the report, saying the administration wrongly assumed that regulatory liability, rather than borrower risk itself, explained higher rates near the ability-to-repay threshold. He added that the report never considers the costs that never materialized due to regulation, like preventing another financial crisis, which costs taxpayers when the government bails out financial firms. 

"The CEA assumes that all of the difference in pricing is due to the CFPB's regulation. But one would always expect higher rates for higher [debt-to-income] mortgages — they are riskier all else being equal, and there's no reason to think that rates would increase in linear fashion," Levitin argued. "Additionally, CEA ignores that there is no secondary market for non-QM mortgages. In 2014, the FHFA directed Fannie and Freddie to purchase only [qualified mortgage] loans or loans exempt from the ability-to-repay requirements [which] explains the much smaller volume of loans with [debt-to-income levels above] 43% — lenders do not want to be stuck with an inventory of risky loans."