WASHINGTON, Dec 30 (Reuters) – When Bianca Jones, a 33-year-old special education teacher in Memphis, Tennessee, decided a couple of years ago that she wanted to buy a house, she started digging into her Experian credit report. She was shocked by what she found.

Her student debt had been double-counted, making it look as though she owed a quarter of a million dollars and putting home ownership out of reach. Jones disputed the items with Experian, one of the major credit reporting agencies, multiple times in writing and over the phone, but got nowhere.

“They kept saying it’s been verified, it’s been verified…They never investigated. They never tried to remove it,” Jones said in an interview.

Eventually, Jones complained to the Consumer Financial Protection Bureau, a federal watchdog created by Congress in 2010 to protect consumers in their financial dealings, helping her lawyers show a judge the lengths she’d gone to mitigate damage to her credit, according to her attorneys, legal papers and a copy of the complaint. That paper trail eventually helped Jones successfully sue Experian to correct her record.

Jones closed on a house purchase in the Memphis suburb of Millington for $300,000 in January.

“If I didn’t have this agency to go to, I don’t think I’d be in the house right now,” said Jones. “It actually changed my life.”

Experian and the CFPB did not respond to a request for comment on Jones’ case.

AGENCY FACING SHUTDOWN

In interviews, consumers who had fallen on hard times or known difficulty, lawyers who work with the poor and credit counselors told Reuters the CFPB had been a lifeline for people facing hardship and they feared that, without it, many consumers would be left unprotected from financial predators.

Conceived by Senator Elizabeth Warren to police the type of lending that fueled the 2008 financial crisis, the CFPB has long been a target of conservatives and industry. Congress created the agency as part of post-crash reforms in 2010 as the sole federal body primarily charged with protecting consumers’ rights in the financial marketplace.

The CFPB now faces extinction under President Donald Trump’s second administration, which says the agency is a political weapon for Democrats and a burden on free enterprise.

Speaking to reporters at the White House in February, Trump said it was “very important to get rid of the agency,” claiming, without spelling out evidence, that Warren had “used that as her little personal agency to go around and destroy people.”

In an interview, Warren dismissed the criticism as a sign the CFPB was doing its job. “This is not about vendettas. This is about enforcing the law as it is written, so that billionaires and billionaire corporations don’t cheat American families. I think that’s a pretty good thing,” she said.

White House Budget Director Russell Vought, a staunch CFPB critic and the agency’s acting head, told “The Charlie Kirk Show” podcast in October he plans to shutter the CFPB. The administration is fighting in court to fire up to 90% of its workers, while planning to move pending investigations and litigation to the Justice Department.

The agency says it is due to run out of money in early 2026 and Vought says he cannot legally seek more until the Federal Reserve returns to what the administration deems “profitability,” a position a federal judge flatly rejected on Tuesday, finding it without legal merit. Congressional Republicans also slashed the CFPB‘s maximum allowable funding in July.

Together, the administration, congressional Republicans and industry-backed lawsuits have undone a decade’s worth of CFPB rules on matters ranging from medical debt and student loans to credit card late fees, overdraft charges and mortgage lending.

The agency has also dropped or paused its probes and enforcement actions, and stopped supervising the consumer finance industries, leading to a string of resignations.

The CFPB and the White House did not respond to requests for comment.

Warren said that as a law professor studying bankruptcy she saw that consumer protections were weak and fragmented, and that America needed a single federal agency dedicated to protecting consumers from unfair, deceptive and abusive practices.

“I was stunned by the number of people in financial trouble who had lost a job or got sick but who had also been cheated by one or more of their creditors,” she told Reuters. “For no agency was consumer protection a first priority, it was somewhere between fifth and tenth, which meant there was just no cop on the beat. If the CFPB is not there, people have nowhere to turn when they get cheated.”

CRITICS COMPLAIN OF OVERREACH

Republicans said the agency was redundant, with federal bank watchdogs, like the Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation, and state regulators already looking out for consumers, and that its funding and leadership structure were unconstitutional. Like other banking regulators, the CFPB‘s funding is not set annually by Congress and does not come directly from taxpayers. Rather, the agency draws on the Federal Reserve and its director was until recently protected from removal at will by the president.

Republicans accused the CFPB‘s first director Richard Cordray, a Democrat, of using those powers to crush small banks and businesses via overzealous enforcement and complex regulations, and of overstepping the agency’s legal authority by trying to regulate companies Congress had exempted from its oversight, such as auto dealerships.

Conservative and industry groups tried several times to curb its powers or extinguish it altogether via the courts. In 2020 the Supreme Court handed the president the power to fire the director, which he has since used. Critics on the political right accused former director Rohit Chopra, a Democrat, of exceeding his authority, flouting the federal rule-making process, and harming consumers with an ill-conceived crackdown on financial firm fees.

Thomas Hoenig, who served as vice chair of the FDIC from 2012 to 2018, said he was skeptical of some of the CFPB‘s work under prior administrations, but that it still served an important purpose.

“If you take them out of the picture altogether, you’re going to get more abuse, not less,” he said. “I’m disappointed to see the CFPB just go away.”

“VERY IMPORTANT FOR ME”

For some, though, the agency has been a lifeline. Millions of Americans like Jones who are struggling with credit reporting errors, predatory lenders, debt collectors, fraud, discrimination or other challenges, are now filing complaints every year with the agency, which prompts companies to fix the issues, sometimes by paying the complainants, or explain themselves.

When companies repeatedly break the rules, the CFPB punishes them and tries to make their customers whole. To date, it has returned $21 billion to consumers, according to CFPB data.

Morgan Smith, a 31-year-old single mother and social services worker in Issaquah, Washington, turned to those resources when she realized she had been a victim of identity theft.

After her wallet and ID were stolen from her car, she learned that someone had opened up a string of accounts in her name, she said: a rental car that ended up in a crash, an unpaid storage unit and a hotel room at an amusement park. Reuters was unable to confirm Smith’s account independently.

“I went straight to the CFPB and I was navigated there to their consumer education tab where I was able to find out how to deal with fraud and scams. It gave me all the information I needed to know…my rights,” she said.

“That was very important for me to have this resource.”

Without the CFPB, borrowers would once again rely on a hodgepodge of federal, state and other local agencies which lack the CFPB‘s resources, expertise and legal powers, say consumer groups.

“Prior to the CFPB coming around, we’d have to say, ‘write your attorney general, write to the FTC,’ whoever it was, and it became this sort of letter-writing campaign,” said Sam Hohman, who runs the Nebraska nonprofit Credit Advisors Foundation, which helps people get out of debt and offers consumer education services.

As a result, people like Virginia resident Michael Johnson, 49, may have fewer options in future when they fall into trouble.

After a kidney transplant and leg amputation several years ago left Johnson unable to work, he racked up credit card debt paying for basic expenses, he said. This summer he received court summonses from creditors seeking to collect on that old debt, according to court records.

“I got in over my head unintentionally,” Johnson said in an interview.

Using a CFPB database of credit card terms and conditions, Johnson learned that his creditors were required to use arbitration rather than sue in court, which could cost more than the underlying debts. Johnson represented himself in court and says so far one creditor has dropped its complaint while the other is considering its options.

“It adds credibility to your defense that you understand your rights,” Johnson said. “Life happens to everybody.”

(Reporting by Douglas Gillison in Washington; Editing by Michelle Price and Michael Learmonth)