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consumer watchdog
'So Much for Lowering Costs': Fury Over Musk's Death Wish for CFPB That Returned Over $20 Billion to Consumers
"The richest man in the world wants to shut down an agency that keeps people like him from ripping off the rest of us."
Feb 08, 2025
Defenders of a Consumer Financial Protection Bureau that has returned tens of billions of dollars to duped and defrauded U.S. consumers expressed outrage overnight and into Saturday after the independent agency was declared deceased by billionaire Elon Musk and its operations were handed over to the chief architect of the far-right Project 2025 Russell Vought.
Vought, who earlier this week was confirmed as head of the Office of Management and Budget by Senate Republicans, was named acting director of the CFPB by President Donald Trump, according to various reports.
The appointment of the far-right ideologue came less than a day after reports emerged that members of the Musk-led Department of Government Efficiency( DOGE) were granted access to key CFPB systems and Musk himself posted to his online social media X that the agency should "RIP," suggesting it was in the process of being dismantled or, in his mind, already killed.
"Since its creation, the Bureau has returned $21 billion to people's wallets by fighting against illegal financial charges, junk fees, debts, and fraud," said Mike Calhoun, president of the nonpartisan Center for Responsible Lending, in a statement on Saturday. Now, when people are already struggling to pay higher prices for necessities like eggs and milk, the Trump administration appears to have decided to deepen the pain by directly taking aim at the agency that helps keep our money safe."
"When people are already struggling to pay higher prices for necessities like eggs and milk, the Trump administration appears to have decided to deepen the pain by directly taking aim at the agency that helps keep our money safe."
"'Let them eat debt' is not a strategy for making America great again," Calhoun added, "and weakening the CFPB certainly isn't the way to keep working families, our financial markets, or our economy strong."
Stacy Mitchell, co-director of the Institute for Local Self-Reliance, which challenges corporate encroachment on the common good, said, "Obviously this isn't about 'efficiency.' It's about dismantling law enforcement that protects Americans from corporate power."
Congressional Democrats also reacted with contempt to Musk's message and the news that the agency's systems—like those of other agencies DOGE has put its hands on—were under threat.
"Here is the richest man in the world bragging about eliminating an agency that has delivered $21 billion back to working-class families since its inception," said Democrats on the House Committee on Financial Services, led by Ranking Member Maxine Waters of California. "Even most Republicans want the CFPB to continue protecting them from being ripped off by abusive big banks and predatory lenders."
"Here are the FACTS: 81% of voters, both Republicans and Democrats, support the CFPB and want the agency to continue its work," said Rep. Juan Vargas (D-Calif.), also a member of the committee. "Even so, Trump has moved to freeze the CFPB to take money out of YOUR pocket to line those of his billionaire friends."
In a letter sent to the CFPB on Friday—addressed to the previous acting director, Treasury Secretary Scott Bessent, whose first act of business was reportedly to order a halt of "all meaningful work"—Waters, Vargas, and 79 other Democratic members of the House said they were "deeply alarmed and troubled that you appear to be launching the Trump Administration's plan to contravene the will of Congress and unlawfully 'delete' this popular consumer watchdog that enjoys the broad bipartisan support of four out of five Americans."
According to the letter:
... we understand that you have ordered staff to halt all meaningful work of the CFPB, including ordering staff to stop investigating violations of consumer financial protection laws or settling enforcement actions, basically letting bad actors off the hook. We also understand that you have arbitrarily ordered the suspension of all CFPB rules that have yet to take effect, which would delay billions of dollars in savings and credit opportunities for consumers, if not rob them entirely.
We urge you to immediately rescind what appears to be an illegal stop work order and allow the public servants at the CFPB to get back to work for the American people as required by law.
As of this writing, the CFPB's homepage (www.consumerfinance.gov) prominently displayed a 404 error message, though portions of the site appeared to be active.
In a Saturday statement, the Democrats on the House Finance Committee said the 404 image on the CFPB website was intentionally "deceptive," calling it "a brazen attempt to fool consumers and the public about the status" of the agency.
"As of this moment, links and pages are still up and functional on the website," the statement said, "including the Consumer Complaint portal and database and Home Mortgage Disclosure Act (HMDA) database. Various aspects of the CFPB's web content is required by statute to be published and available on the CFPB's website."
"Let's be clear: the people cheering this the loudest are scammers and people who don't want you to keep your hard-earned dollars. So much for lowering costs."
Nadine Chabrier, counsel at the Center for Responsible Lending, said the "deeply troubling" developments at the agency will "undermine the CFPB's mission to protect consumers from financial misconduct" of various kinds.
"CFPB has returned more than $20,000,000,000 to consumers since it was founded," said Rep. Gabe Amo (D-R.I.) on Friday evening in response to Musk's tweet. "Let's be clear: the people cheering this the loudest are scammers and people who don't want you to keep your hard-earned dollars. So much for lowering costs."
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State Farm Accused of Trying to 'Cash in on a Terrible Tragedy' With $740 Million 'Bailout'
The head of Consumer Watchdog argued the company is "detouring the rules that protect state consumers from insurance price gouging."
Feb 04, 2025
The insurance giant State Farm on Monday asked California state insurance regulators to approve an emergency interim rate hike of 22%, drawing pushback from the nonprofit Consumer Watchdog, which accused the company of not providing the financial data necessary to justify the increase.
"State Farm wants to fill its bank accounts on the backs of California homeowners, some of whose homes are in ashes," said Carmen Balber, Consumer Watchdog's executive director. "Insurance Commissioner [Ricardo] Lara must require State Farm to prove it needs this staggering increase."
Devastating wildfires ravaged the Los Angeles area starting in early January, compounding an already escalating insurance crisis in the state and causing between $35 to $45 billion in insured property losses, according to one estimate. The fires, which are now either out or fully contained, generated over 8,700 claims for State Farm General, the California homeowners insurance affiliate of the firm State Farm Mutual Automobile Insurance Company. The compnay said it has paid over a billion to customers due to the blazes.
State Farm General is the largest insurance group in the state. The firm stopped writing any new policies in May 2023, and last spring the company announced it would not renew plans for tens of thousands of homeowners—though it has said it will renew policies for those impacted by the recent fires in Los Angeles County.
In a letter to the California Department of Insurance, leaders at State Farms General requested that the department take "emergency action to help protect California's fragile insurance market," by allowing interim rate increases of 22% for homeowners, 15% for renters, 15% for condo owners, and 38% for rental dwellings.
"State Farm General's rate filings raise serious questions about its financial condition," department spokesman Gabriel Sanchez said, according to the outlet Insurance Business.
Proposition 103, a measure passed in 1988 which sought to protect consumers from arbitrary insurance rate hikes, requires insurance companies to back up their rate applications with "comprehensive data," according to the California's insurance commissioner.
Consumer Watchdog said that State Farm General is asking for an increase on an interim basis, meaning "without having to prove that it needs that increase, or the impact higher premiums will have on the ability of consumers to afford coverage."
The letter from State Farm General to the department includes an "illustration of State Farm General financial deterioration" as an attachment.
According to Consumer Watchdog, the requested 22% hike on home insurance rates amounts to $740 million a year for the company. The group has called the request a "bailout."
The request comes after State Farm General last summer asked for a 30% rate increase for its homeowners, a 52% rate increase for renters, and a 36% rate increase for condominium owners. In December 2023 it was approved for a 20% increase for homeowners and condominium owners.
The insurance company is "trying to cash in on a terrible tragedy by detouring the rules that protect state consumers from insurance price gouging—at a time when those safeguards are more important than ever," said Balber.
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Amid LA Inferno, Home Insurers Under Fire for Policy Cancellations
One observer said it "really feels like the climate crisis is putting the home insurance industry on a fast track to being almost as reviled as the health insurance industry."
Jan 08, 2025
As deadly wildfire incinerated more than 1,000 homes and other structures in Los Angeles County this week, insurance companies are sparking outrage for having recently canceled homeowners' policies across California—including in some of the areas hit hardest by the current blazes.
More than 1,000 homes, businesses, and other buildings have burned in the Palisades, Hurst, and Eaton fires—the latter of which has killed two people, The Los Angeles Times reported Wednesday. Fueled by fierce Santa Ana winds and extraordinarily dry conditions, all three fires were at 0% containment as of Wednesday afternoon, according to the California Department of Forestry and Fire Protection (CAL FIRE).
Authorities have issued mandatory evacuation orders for more than 80,000 residents. Los Angeles County Fire Chief Anthony Marrone told reporters Wednesday morning that a "high number of people who didn't evacuate" suffered serious injuries. Hundreds of thousands of area residents are also without power.
CAL FIRE said on Wednesday afternoon that the largest of the three blazes, the Palisades Fire, had burned more than 11,000 acres, while the Eaton Fire had scorched over 10,600 acres and the Hurst Fire topped 500 acres burned. Firefighters battling the Palisades Fire reported hydrants coming up dry.
Amid increased extreme weather events driven by the climate emergency, insurance companies have faced criticism for canceling policies and pulling out of states with elevated wildfire or hurricane risk.
State Farm, one of California's largest insurers, announced last year that it would not renew 30,000 home insurance policies throughout the state—including at least hundreds in areas affected by the current wildfires—explaining that the move was meant to avert a "financial failure" that would "detrimentally impact the entire market."
Other insurance companies have taken similar action, leaving their customers scrambling to find coverage.
Michael DeLong, research and advocacy associate at the Consumer Federation of America, told Common Dreams Wednesday that while climate-driven extreme weather has "made many areas riskier to insure," insurance companies are also canceling policies because "they're trying to take advantage of the situation of rising risks and rising costs to weaken consumer protections."
"They've been waging a campaign against Proposition 103… a ballot initiative that got passed in the late 1980s that, among other things, puts in place a lot of consumer protections about insurance," he added. "This has been a big deal for consumers and it's helped keep rates down. But insurance companies really hate these consumer protections and have been trying to weaken them."
In a Wednesday interview with Common Dreams, Jamie Court, president of the Los Angeles-based group Consumer Watchdog, noted that "under Prop 103, we could challenge rate hikes, and we saved $1 billion by challenging rate hikes that were too high last year."
However, advocates say that California Insurance Commissioner Ricardo Lara's new "sustainable insurance strategy" will make it harder to challenge rates and lacks transparency and public input.
DeLong said Lara is "allowing the net cost of reinsurance to be passed on to consumers."
Insurance Commissioner Ricardo Lara Reinsurance Regulation To Pump Up Homeowners Rates By 40% Without Guarantees of New Wildfire Coverage! With No Opportunity For Public Input! Read: consumerwatchdog.org/insurance/la... #insurance #InsuranceClaims #california
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— Consumer Watchdog (@consumerwatchdog.bsky.social) January 4, 2025 at 10:49 AM
Reinsurance is an arrangement in which insurance companies transfer risk to another insurer to mitigate damages.
"Until a few weeks ago, California's regulations didn't allow the cost of reinsurance to be passed on to consumers, and now they do," DeLong explained. "So that's probably going to drive up costs for consumers. The commissioner and the department say it's going to make the insurance industry more stable—we're kind of skeptical of that."
"Another reform that he's done is allowing the use of catastrophe models in insurance," DeLong added, referring to a risk management tool that helps insurers assess potential financial impacts of disasters. "Every other state allows insurance companies to use them; California did not until recently. Catastrophe models can be helpful and useful; the problem is that many catastrophe models aren't that good; they're based on inaccurate or incomplete information and they don't have any transparency."
Court also decried the lack of transparency in catastrophe models, which he said "can say anything they want, and then we have to pay the rate." He also criticized Lara's proposal to allow insurers to hike rates in exchange for a purported commitment to cover more properties in wildfire areas.
Lara said last year that "insurance companies will write no less than 85% of their statewide market share in wildfire distressed areas,"
However, Court cautioned that Lara is assuming "that the companies are actually going to increase their footprint in wildfire areas."
"When you look at the details... there are these big loopholes," he said. "Insurance companies have to commit to 85% [wildfire area saturation] within two years—or they can do 5% more than they're doing now. So if they're at 0%, they can go to 5%. This is complete bullshit."
As coverage becomes more difficult to obtain, hundreds of thousands of California homeowners have turned to the state's FAIR Plan, an insurer of last resort, which has more than doubled the number of policies issued since 2020.
"If the FAIR Plan is the only thing you can do, take that," DeLong said. "In the meantime, you can reach out to the Department of Insurance and let them know that you want them to protect consumers and reject excessive rate increases."
"You can also try mitigation measures to reduce risk, like clearing brush around your home, improving your roof so it's a Class A roof, which means it's very difficult to catch on fire, you can take measures to prevent embers from starting fires on your property," he added. "The problem is that all of that costs money, and not everyone may be able to afford that… California has recently started some proposals to provide grants to consumers to undertake these measures, and these should be expanded even more."
"There is some good news," DeLong said. "The California Department of Insurance is working on a public catastrophe model, one that would have opportunities for input from consumers, that would be based on data that's fair and open."
"However, that's going to take at least a couple of years to get off the ground," he added.
Court concurred. "We're a long way away from that, and it's not even going to be something that companies have to use, it's something that would be supplemental," he said of the public model. "I think it's giving lip service, but I think it's the right direction. It just needs to be much more aggressive."
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