Bessent Gives Musk a Present, Stalling CFPB Oversight of Big Tech

Treasury Secretary Scott Bessent belatedly slipped a protection for Big Tech firms, and in particular Elon Musk’s X, into his order to stop work at the Consumer Financial Protection Bureau.

The secretary is serving as acting director of the CFPB, which since Monday, February 3, has had practically all of its professional activities put on hold. That order to essentially stop working came in an all-hands email from Bessent’s office in his capacity as acting director. It said that no proposed or final rules, formal or informal guidance, enforcement actions or settlements, public communications including research paper releases, or litigation filings and appearances could be conducted, unless Bessent expressly approved them. This stasis would continue indefinitely, pending a review “in order to promote consistency with the goals of the Administration.”

But the next day, an update to that February 3 email went out, adding an additional restriction. The update, according to the email obtained by the Prospect, states that CFPB is “not to initiate supervisory designation proceedings or designate any nondepository institution for supervision.”

According to sources, the update came about because the first order didn’t mention the core CFPB task of supervision at all, prompting questions to Bessent, the acting director. But the response, particularly around designating certain entities for supervision, has a very specific meaning.

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Under the Dodd-Frank Act, the agency has the authority to supervise a non-bank “larger participant” in various specified markets for consumer financial products and services. The procedure for designating non-banks was updated in 2022.

In November 2023, former CFPB director Rohit Chopra proposed a rule to supervise larger participants in the digital wallet and payment app space. CFPB already had authority over payment apps through the Electronic Fund Transfer Act, but supervisory authority allowed the agency to treat payment apps more like a bank, with the ability to conduct thorough examinations and obtain records.

The payment app rule was finalized in November 2024, with the expectation that companies like Apple and PayPal would fall under it. But CFPB has to designate those large participants individually. In December, for example, it designated Google Payment Corp. for supervision under the payment app rule. This includes Google’s peer-to-peer payment platform and Google Pay Balance, which stores funds for future payments on the Google Pay app.

One tech firm moving toward “larger participant” status in payment apps is X, formerly known as Twitter, which its CEO Musk envisions as an “everything app,” like WeChat in China. X recently signed a deal with Visa to support real-time payments through the X Money Account, which is due to launch later in 2025. Users would be able to make peer-to-peer payments with the account, which would connect to a debit card.

By stalling designation of nondepository institutions, Bessent ensures that X will not be designated for CFPB supervision, at least in the near term.

The more innocent explanation for the last-minute change is that Bessent was likely uninformed about what the CFPB does, and hastily added supervision later. But the inserted directive specifically bars designation of non-banks in the supervisory process, as a not-so-thinly-veiled shield for Big Tech payment app firms, and in particular the company run by special government employee Elon Musk.

The Treasury Department did not respond to a request for comment.

The news of the special Big Tech shield comes as the agency’s union identified three members of Musk’s DOGE team who have suddenly shown up in the CFPB’s employee directory. Chris Young, a former pharma lobbyist who worked for Musk’s organizing campaign in 2024, is in the directory, along with Tesla and Twitter tech employee Nikhil Rajpal and former Twitter intern Gavin Kliger, whose father is an attorney at credit report bureau Experian, which CFPB sued just last month over “sham investigations” into errors made on credit reports.

The new DOGE team was reportedly seen at the CFPB offices today. In a blog post, the CFPB Union wrote that they “welcome our newest colleagues and look forward to the smell of Axe Body Spray in our elevators.”

According to sources, Bessent is not in charge of day-to-day operations at CFPB; that responsibility has fallen to his chief of staff Dan Katz, a former Goldman Sachs associate who served as a senior adviser to Treasury in the first Trump administration and spent the Biden years at Amberwave Partners, a macro hedge fund he co-founded.

Employees at the agency who have spoken to the Prospect on the condition of anonymity have said that while preparatory work like supervision, research, and other activities was taking place within the letter of the directive by Bessent and Katz, the atmosphere is far less hectic.

Already, the CFPB freeze is having a dramatic effect on an agency that has returned over $20 billion in restitution to wronged customers over the years. This week, a federal judge ordered the agency to state its position in a case brought in January against Capital One, for allegedly deceiving customers about savings accounts that deprived them of an estimated $2 billion. CFPB, in pausing all litigation, asked for an indefinite suspension of the case, despite filings due this week. But Judge David Novak said that the agency must declare by February 14 whether it is dropping the case or if it should be combined with existing consumer lawsuits against the same activity. Separately, in a California court, a federal judge denied CFPB’s request for a continuance in a case against online lender SoLo.