This week, a lot of things happened in terms of monopoly news, both good and bad. Trump met with the CEO of Fedex and then moved to allow more China imports, antitrust agencies made a quiet move that will cause real pain to private equity, and Google, Amazon, and Microsoft were busted by an analyst for accidentally financing child porn. That’s after the paywall.

But first, I want to spend a bit of time explaining what I think was the most important story of the week, which is the de facto shutdown of the Consumer Financial Protection Bureau (CFPB). This move says a lot about what America is going to look like in the next few years, what kind of Presidency we are in, and the changing bargain between the public and big business.

The CFPB was created in the wake of the 2008 financial crisis to regulate banks above $10 billion in size. A lack of regulation of mortgages and other credit products helped foster that disaster, and Congress didn’t want a repeat. It wasn’t that there weren’t laws against unfair, deceptive, or abusive activity, it was that bank regulators tended not to prioritize them. So Congress moved consumer protection authority from lots of banking agencies to an agency dedicated solely to enforcing them, the CFPB.

Last week, Elon Musk and the new Trump Office of Management and Budget chief Russ Vought stopped all work at the commission, including enforcement of rules, litigation, as well as supervision and examination activity. They are planning to shutter the headquarters and presumably will be laying off most of the staff.

By shuttering the CFPB, Trump is not just going back to a pre-financial crisis status quo, but to something actually weaker than that. There is essentially no longer any Federal enforcement of consumer protection rules for financial products.

To understand the impact of this move, a good metaphor is a scene in the 1984 hit movie Ghostbusters, a film about a group of private contractors who hunt and trap ghosts for money, putting them in a containment unit. Towards the end of the movie, a meddling government official forces the shutdown of the containment unit, which leads to an explosion, and then ghouls coming out all over the city. Cabs are run by goblins, the Titanic arrives with dead passengers, and eventually, the evil god, Gozer, comes to take over the world.

To draw a bad metaphor, ending the CFPB is a bit like blowing up the containment unit, with scammers as the ghosts and ghouls, and big tech as Gozer. We can now expect rampant fraud and cheating in banking and fintech, not just a scam here or there, but regular losses of life savings by people who followed the rules, illegal foreclosures, random seizures of the working capital of small businesses, abuse by debt collectors, and routine deception by even respected financial firms. And behind that, we could see big tech, either Google, Meta, Amazon, or perhaps X, serving as your credit card, payroll provider, and debt collector, all in one. It’s a bit like what I wrote about in 2019 when then-Facebook tried to start its own currency, Libra.

Let’s start with some of the small stuff that will now change. Rules against excessive overdraft fees? Gone. A rule capping credit card late fees? Gone. Oversight of debt collectors and payday lenders? No more. An honest site to compare credit card products? Likely gone. In 2023, the CFPB said that big banks can’t charge junk fees for basic customer service, like being able to check the amount of money in your account. The reason isn’t just that it’s nice, but that big banks themselves were unable to offer basic information, like who owned mortgages, prior to 2008. That’s gone too. Another rule put forward recently is that mortgage servicers can’t garner excessive fees when they foreclose, which is an incentive to foreclose rather than working out loans. No longer.

And then something more significant. In July, the CFPB proffered an interpretive rule for how companies, such as Walmart, Kroger, and Wendy’s, give “paycheck advances” to their employees, charging over 109% in interest charges. About 5% of workers use these, and the number is increasing rapidly. Is there disclosure of the terms? That’s not clear. But now that there’s no one paying attention, we can expect these company store-like products to be everywhere.

Finally, let’s do the big stuff, big tech and fintech.

Elon Musk’s stated goal with X is to create an “everything app,” which you would use to communicate, engage with social media, pay for things, hail cabs, shop, and so forth. All the big tech monopolists want to be the “everything app.” The CFPB was proposing to treat these companies with payment systems as, well, payment systems, and subject them to the same supervisory treatment that banks have. Now that’s out the window, so big tech firms have a competitive advantage over banks. More than that, new “fintech,” which is to say companies that act like banks but do so on your phone, won’t be regulated or FDIC insured, so a whole generation of Americans will be introduced to the nice bank runs of the 1920s, losing their savings because they clicked on the wrong box.

So what’s the stated reason Musk, as well as others like Mark Zuckerberg and venture capitalist Marc Andreessen, put forward for eliminating the CFPB? Well, they say there’s corruption, it’s Elizabeth Warren’s agency that’s unaccountable, et al, but mostly, they argue that the CFPB is targeting conservatives for “debanking” or removing them from the banking system. That is of course the opposite of the truth, Director Chopra proposed the first ever rule to block debanking. But Andreessen went on Joe Rogan and lied about it anyway, because he’s invested in companies like Synapse, which cost many peoples’ life savings, and some firms in his portfolio were shut down by the CFPB for scamming people. As for Zuckerberg, who went on Rogan and said that Meta is not a bank, well, Meta has a payments business, and he tried to start a currency and still wants to. And he’s angry at the CFPB because of this:

Every President gets a honeymoon period, because voters have picked that leader and want to see that leader implement his policies. Trump is popular, with voters seeing him as “tough," "energetic," "focused" and "effective,” as well as following through on his campaign promises. His only weakness, with 66% of the public agreeing, is that he’s not focused enough on lowering prices. One key problem for him is interest rates, which are high and likely to remain high. Trump promised on the campaign trail to cap credit rates, and if he’s shutting down the CFPB, then that’s not going to happen.

At any rate, the banking lobby has always wanted to weaken consumer protection rules, and since the financial crisis, shut down the CFPB. Now, with Silicon Valley’s support, and a President who looks populist but seems to be governing as George W. Trump, they will likely achieve it.

That said, destroying the bureau strikes me as a long term strategic error for the banking sector and big tech. The banks were already losing to Silicon Valley, and now they are at a regulatory disadvantage to boot. More fundamentally, this shutdown breaks a basic deal. I worked in the House during the great financial crisis, and the arrangement was that the banks would accept some mild oversight via the CFPB, and in return they would get a multi-trillion dollar bailout and make excessive profits. I didn’t like that deal and encouraged the member I worked for to vote against it, but it was forced on liberals by Barack Obama. (This deal was an intra-Democratic Party arrangement; conservative Republicans were in thrall to the banks and wanted nothing but foreclosures and bailouts. And they still do.)

It was an egregiously terrible choice, one that liberals couldn’t acknowledge because then they’d have to admit a whole lot of uncomfortable truths, notably that Wall Street is a malevolent force, that Obama was a malevolent leader, and that the Dodd-Frank reform bill passed in the wake of the crisis, rather than ending bailouts, was a joke. But now they will be faced with the bracing truth, that there is no good faith negotiations with dominant firms demanding coercive governing power.

Either Silicon Valley bankers rule America, or the public does. But there’s no middle ground.

And now, after the paywall, some details on a quiet move by antitrust agencies that will cause real pain to private equity, how Google/Amazon/Microsoft got busted for accidentally financing child porn, and a reversal by Trump of some key China tariffs after a meeting with the CEO of FedEx.

Plus, Amazon surpasses Walmart as the biggest retailer in America…