The Club PUB 02/24/2025

THE CFPB TOOK AIM AT BIG TECH. THEN MUSK MOVED TO DISMANTLE IT.
By TONY ROMM The Washington Post

ELON MUSK IN THE OVAL OFFICE ON TUESDAY. HIS ASPIRATIONS TO INTEGRATE DIGITAL PAYMENTS INTO HIS SOCIAL MEDIA SITE X WERE BEHIND HIS ATTACKS ON THE CONSUMER PROTECTION BUREAU, FORMER OFFICIAL SAY.

About a week before Elon Musk helped take over the nation's leading consumer financial watchdog, his social media site, X, unfurled the details of a new payment system that may have drawn federal scrutiny — underscoring the complicated web of personal interests at stake as the world's richest man advises President Donald Trump on a reconfiguration of the U.S. government.

The system is called X Money, and in the vision sketched out by executives, it would allow millions of users on X to instantly send money to friends, family members and others. Heralding it as a breakthrough in finance, the company said in late January it would launch this year with the support of Visa, one of the largest credit card networks globally.

Because of its direct ties to bank accounts and debit cards, X Money normally would fall under the remit of the Consumer Financial Protection Bureau, an agency with vast powers to crack down on unfair, deceptive and predatory corporate practices. Formed in the wake of the 2008 financial collapse, the CFPB in recent years has interpreted its mission expansively — policing traditional banks as well as Apple, Google and other tech giants that seek to offer payment services.

But that was before last week, when Musk's team of young agents — acting at Trump's behest — began targeting the CFPB as part of their disruptive campaign to slash spending and regulation across government. As they burrowed into the bureau's computers, Musk made clear his goal is to dismantle the agency, which soon ordered a full stoppage to all of its work to investigate companies and protect consumers.

By Tuesday, top CFPB enforcement offi cials departed the agency after clashing with the Trump administration over the freeze, according to emails obtained by the Washington Post. And Musk's aides, operating under the banner of the U.S. DOGE Service, appeared to gain authorization to access "all" CFPB computer systems, other emails indicated, raising questions about whether those close to the tech mogul might be able to see nonpublic information about his potential digital-payment competitors.

But the shutdown alone amounted to a long-sought victory for Musk and other CFPB critics in Silicon Valley, where executives have lobbied to neuter its oversight — and some companies, including X, have supported lawsuits to scuttle the agency's rules. And it left unclear the future of Washington's approach to digital finance, as a wave of formerly brick-and-mortar banking services migrate online with no clear federal regulator to oversee them.

"This is like a bank robber trying to fire the cops and turn off the alarms before he strolls in the lobby," Sen. Elizabeth Warren, D-Mass., said at a rally outside CFPB headquarters Monday .

Musk did not respond to a request for comment. Spokespeople for X also did not respond to multiple requests.

Musk and his team had been laying the groundwork for years to launch a payment system: He reportedly raised the idea at one of his first meetings with staff after acquiring the social media company, then known as Twitter, in 2022. Once he renamed the site the following year, Musk promised that July that X would eventually expand to "add comprehensive communications and the ability to conduct your entire financial world."

"Think Venmo at first," Christopher Stanley, who runs security engineering for X, said in a post this past April explaining the app soon would allow users to send cash and make payments. Stanley described the ultimate goal as a payment and lending network in which "you shouldn't ever need to take money out because you should be able to do anything you need on our platform."

Musk's interest in payments reflected a rapid shift underway throughout Silicon Valley, as the largest tech companies — already stewards of vast troves of consumer data — looked to monetize their insights further by serving as the primary conduits through which millions of people spend money. That trend had already raised alarms in Washington, where CFPB officials under President Joe Biden came to fear that federal laws had not kept pace with the digitization of banking.

In a study of major tech firms by the bureau's last director, Rohit Chopra, the agency found most adults had used digital payment apps — even though the money stored on these services is not insured against loss, unlike traditional banks. The bureau also collected tens of thousands of complaints from consumers, who said they struggled to address fraudulent charges and other issues on their accounts.

"Digital payments have gone from novelty to necessity, and our oversight must reflect this reality," Chopra said last fall.

By the end of the Biden administration, the CFPB had meted out a number of punishments against tech companies, products and services, including Apple, Cash App and Zelle, while launching probes into firms including Meta, the parent of Facebook. Many consumer advocates heralded the CFPB intervention, arguing that federal and state laws had created a messy patchwork with no clear consumer protection watchdog.

But Chopra's actions only earned more enemies in Silicon Valley, which had been quietly stoking congressional opposition to the bureau's oversight for months. Shortly after the 2024 election, the venture capitalist Marc Andreessen publicly lashed out at the CFPB — attacking the agency on a podcast for "terrorizing financial institutions."
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"Either way, you would have the CFPB looking into the activities of X," said Adam Rust, the director of financial services at the Consumer Federation of America, which supports the bureau's oversight. "That may be something Musk doesn't like."