President-elect Trump should declare a ceasefire in the war on credit

Ting Shen/Bloomberg

Thought exercise: What would your life look like without access to credit?

No credit cards, no buying a house or vehicle without cash on hand and no access to something as simple as overdraft protection tied to a debit card.

For most people, that would be somewhere between inconvenient and very painful. But it is not a what-if for millions of Americans with little to no credit access. The FDIC's 2023 National Survey of Unbanked and Underbanked Households reported that nearly one in five American households is unbanked or underbanked. High interest rates, tight credit conditions and the assault on so-called junk fees are not natural occurrences in a free market — they are manufactured conditions brought about by President Joe Biden's administration.

Like any war worthy of the moniker, this one has generals calling the shots: Jessica Rosenworcel at the Federal Communications Commission, Lina Khan at the Federal Trade Commission and Rohit Chopra of the Consumer Financial Protection Bureau.

Under Khan's leadership, the FTC expanded beyond traditional antitrust concerns to target financial services and consumer credit. The agency's aggressive stance on market concentration led it to investigate credit card companies and "payday" lenders, entities Khan claims limit consumer choices and inflate costs. This is a thinly veiled attempt to restrict credit access, particularly to society's most vulnerable.

Most wars are waged on multiple fronts. This one is no different: Direct attacks against lenders and institutions are apparent, but the supply chain of customers is being affected, too.

Khan has restricted access to digital comparison tools such as Expedia, Care.com and Angi, further exacerbated by the seemingly duplicative efforts of Chopra's CFPB. Both agencies are targeting platforms millions rely on for essential services.

Digital comparison shopping tools and lead generators play a crucial role in the modern marketplace by empowering consumers to find better deals and make informed choices. These platforms aggregate information on products and services, enabling users to compare prices, features and reviews quickly and efficiently. For instance, comparison tools like Expedia help consumers find affordable flights, while platforms like Angi connect homeowners with trusted service providers.

The financial services industry uses similar models to find, inform and educate potential customers. Cue Nerd Wallet and Credit Karma.

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Lead generators, in particular, facilitate the connection between businesses and potential clients by directly connecting consumer inquiries with relevant service providers. Their accessibility is vital, especially when economic pressures demand smarter spending.

The FCC's pending one-to-one consent rule, set to take effect in January 2025, is a campaign to dismantle American access to these innovative shopping tools: an attack on the consumer supply chain. This reckless top-down approach to regulation upends deeply entrenched American spending culture, disregarding how businesses operate in the 21st-century digital marketplace.

One can only imagine the confusion when a lead generator has to explain marketing consent to a customer they have been doing business with for years. "Why now?" they'll ask. It is another complexity layer that will rout the American financial sector.

Chopra's tenure has also seen a clampdown on lenders, with the CFPB making it harder for consumers to access credit services via attacks on nonfinancial comparison tools. Just as the CFPB's actions threaten the clarity and efficiency of digital marketplaces, their stringent regulations on financial services threaten to suffocate the very lifelines many Americans depend on. 

The agency's refusal to use a standard formal rulemaking process has fueled the fire of confusion. At the CFPB, blog posts, press releases, vague guidance, opinion letters and enforcement actions are all possible paths for official guidance, leaving the industry to second-guess itself and threatening access to credit for millions of Americans and small businesses. Chopra avoids clarity like the plague.

Moreover, the FTC — fully empowered to investigate and sue federal agencies — appears to grant the CFPB de facto immunity. Despite the CFPB suffering a significant data breach — wherein a former employee forwarded personal information of over 250,000 consumers to a personal email account — the FTC has taken no action against it. This protective bubble insulates it from the kinds of consequences it imposes on others.

Low accountability, a lack of public recourse and anti-consumer cooperation between the CFPB, FTC and the FCC form a troubling alliance that undermines consumer trust and erodes foundational principles of transparency and accountability in government oversight. And it all stems from the enabling attitudes within the Biden administration.

Time will tell if the Trump administration will call a ceasefire and reverse this regulatory feudalism that keeps tens of millions of Americans trapped with limited credit options.