Dozens of probationary employees at the Consumer Financial Protection Bureau were fired this week. The move follows similar actions made by the Trump administration to reduce federal agencies across the board.

But what is the CFPB? And what would potentially eliminating it mean for American consumers?

The CFPB was established following the 2008 financial collapse to oversee consumer financial products. It was championed by U.S. Sen. Elizabeth Warren of Massachusetts, who spoke at a rally outside CFPB headquarters on Monday.

“This is like a bank robber trying to fire the cops and turn off the alarms just before he strolls into the lobby,” Warren told a crowd.

CFPB was created as part of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, and originated out of Warren’s work around banking practices that were unfair to consumers, like undisclosed late fees. To date, the CARD Act has saved consumers $16 billion in undisclosed credit card fees, according to the CFPB’s website .

The CFPB does this by investigating complaints by individuals and through overarching lawsuits against banks and financial institutions.

Under the CARD Act, banks should only charge late fees to the amount necessary to cover their processing costs, MIT economist Jon Gruber told Boston Public Radio on Thursday. Bank fees are necessary because the bank does have to pay to process late payments, Gruber said.

“The question is: Is that late fee related to what it actually cost them, or is it a chance to screw the consumer?” he said. The typical fee charged by banks was $32, which had creeped up about $10 from the original passage of the CARD Act. So in 2024 the CFPB capped fees at $8, saying this would cover costs for banks and save consumers $10 billion a year.

While accumulating credit card debt can be detrimental, Gruber said, credit can be very beneficial for consumers.

“There is a legitimate role for credit in our society for those who use it appropriately. And you don’t want to shut that down,” Gruber said.

After the CARD Act was passed and the CFPB was created, there was a question about whether access to credit would slow down. It didn’t, Gruber said.

“Credit growth continued rapidly, but in a safer and more informed environment,” he said.

The CFPB has since saved consumers billions of dollars. Meanwhile, the CFPB’s operating costs are only $880 million a year.

“We are not increasing government efficiency by saving $880 million,” Gruber said of dismantling the CFPB. “That is exactly a perfect example of why I have whiplash,” he added. Yes, Gruber said, the government can be bloated and inefficient. But a “scattershot” approach of closing federal agencies, instead of targeting inefficiencies, could cost Americans billions of dollars, Gruber said.

“We need to really be rethinking how we do regulation in the U.S.,” Gruber said. “But, they’re not rethinking it. They’re just cutting it. And that’s not the right approach.”