California strengthens consumer protections in the face of federal cuts | Opinion

With the midterm elections approaching, President Donald Trump is making a show of trying to convince voters that he cares about affordability. In recent weeks, he has spoken about boosting the housing market and capping interest rates on credit cards. But actions speak louder than words, and his actions have already exposed his rhetoric as little more than a public relations effort, undermining financial protection for consumers.

The Trump administration is obsessed with gutting the Consumer Financial Protection Bureau — the federal agency I led as its first director, which was created to protect Americans from predatory lenders, abusive debt collectors and deceptive financial products.

Since early 2025, the bureau has shed hundreds of employees, dropped more than 20 active enforcement cases and abandoned supervision of how big banks and other financial companies treat their customers. California, meanwhile, has put all hands on deck to protect consumers.

During Trump’s first term, the California legislature beefed up the authority of the California Department of Financial Protection and Innovation, the state’s own financial watchdog, modeled after the Consumer Financial Protection Bureau. The state department was created in 2020 to regulate banks, payday loan companies, debt collectors and emerging fintech firms.

Where the Consumer Financial Protection Bureau investigates and enforces federal consumer financial law, the Department of Financial Protection and Innovation does the same under California law.

Now, as Washington D.C. steps back, Sacramento has stepped up. Facing grave new threats from Trump’s second term, the California legislature stepped in to pass several key measures to further bolster the Department of Financial Protection and Innovation’s powers, most notably by expanding its enforcement authority into additional areas, as it became clear that do-nothing officials in Washington were completely unwilling to help.

Recent measures include removing medical debt from consumer credit reports, making it easier to cancel subscriptions and protecting consumers against unfair banking fees. California Senate President pro Tempore Monique Limón, D-Santa Barbara, and Sen. Tim Grayson, D-Orinda, have been especially active proponents of this important work. Gov. Gavin Newsom has emphasized stronger protections for Californians to help save consumers money. He has supported the Department of Financial Protection and Innovation and appointed officials who understand the importance of this work. So far, the department has acted to rein in illegal practices by mortgage companies, escrow agents, subprime lenders, loan brokers and others, saving California consumers millions of dollars and protecting them from further harm — especially military veterans who were being targeted by fraudulent financial schemes.

Notably, the work now underway here reverberates across the country, because when California raises standards for financial companies that operate nationwide, it tends to produce similar results elsewhere, as with the measures on medical debt and unfair banking fees. Newsom also proposed temporary funding covering 100 Department of Financial Protection and Innovation positions through the duration of the Trump administration to expand enforcement and supervision and has made clear his intention to maintain that funding to 2030, including in his current budget proposal. California Attorney General Rob Bonta has been active as well, including by suing the federal government to support the Consumer Financial Protection Bureau. Three additional steps would further strengthen California’s efforts: First, the Department of Financial Protection and Innovation should adopt an enforcement strike force, similar to the Consumer Financial Protection Bureau’s approach. With expanded authority, the state department must navigate competing priorities. A strike force could identify cases that set industry-wide precedents and maximize impact. Second, making the Department of Financial Protection and Innovation’s enforcement priorities public would enhance accountability and help sustain that work beyond this administration. Third, the state department should partner more closely with local officials and law enforcement. California’s deeds speak more loudly than the false rhetoric coming from Washington. Picking up the pieces when the federal government fails to protect consumers is no small task; but California has shown it is up to the challenge. These additional steps will make its work even more effective. Richard Cordray served as the first director of the U.S. Consumer Financial Protection Bureau from 2012-2017. His book, “Watchdog,” tells the story of the bureau’s work to protect consumers.

This story was originally published May 1, 2026 at 5:00 AM with the headline "California strengthens consumer protections in the face of federal cuts | Opinion."