It looks like a government watchdog may have been put on a chain, and some experts are worried what this could mean for financial protections.The Consumer Financial Protection Bureau, a government agency that oversees consumer financial services and products, was ordered to stop all work-related activities. Newly appointed acting director, Russell Vought, cut off the agency's funding and sent an email this weekend telling the staff not to issue any new rules and to cease all investigations.The website's homepage at consumerfinance.gov displayed a 404 error message. The agency's presence on social media was deleted after the Department of Government Efficiency, led by billionaire Elon Musk, gained access to the CFPB systems.In the past, President Donald Trump has been publicly critical of the CFPB and sought to limit the agency's power in his first term.The bureau was initially created in the wake of the 2008 financial crisis with the mission of "enforcing federal consumer financial laws and protecting consumers." As of December 2024, the CFPB reported it had recovered up to $21 billion in compensation, debt cancellation and other forms of relief for American consumers.Democratic Sen. Elizabeth Warren, one of the founders of CFPB, warned in a press release that because the agency was created by an act of Congress, the Trump administration can not legally eliminate it.But with funding strangled and the staff not allowed to work, the CFPB is essentially dismantled. What could that mean for consumers?"In the short term, the CFPB has a mechanism for submitting complaints about financial products or services, and companies would typically respond in 15 days," said credit card and personal finance expert Jason Steele. "But now it's unclear if this mechanism is still functioning. In the long term, it's also unclear how companies will respond without oversight or supervision."We'll break down how the bureau's dismantling could impact you and your finances.Why does the CFPB exist?The CFPB launched in 2011 as an independent financial regulatory enforcement and watchdog agency. Authorized by the DoddFrank Wall Street Reform and Consumer Protection Act, Congress established the independent bureau to address financial regulatory failures that were blamed for leading to the subprime mortgage crisis and subsequent 2008 Great Recession.In addition to overseeing adherence to financial regulations, the CFPB investigates consumer complaints into unfair or deceptive financial products or services and offers public-facing financial education and resources.Over the course of its 14-year history as an independent agency, the CFPB had often drawn the ire of Republican politicians and the financial industry who challenged the enforcement power of the bureau in court. In June 2020, the Supreme Court ruled that the president could remove the CFPB director without cause, but that the agency and its funding were protected by laws that could only be rescinded by the legislative branch. A 2024 Supreme Court ruling upheld the constitutionality of the bureau's funding structure.What happens if the CFPB is eliminated?Even if the CFPB can't be legally eliminated, hampering the bureau's work could still have an impact on consumers who rely on the agency to protect them from fraud, financial abuse and predatory lenders.Rich Dubois, executive director of the National Consumer Law Center, decried the Trump administration's decision to impede the work of the CFPB."Financial companies have shown time and time again that they cannot police themselves," Dubois said in a recent press release. He cited several pending investigations affected by the shutdown, including a lawsuit alleging Zelle skipped safety features in its person-to-person payment service and a lawsuit against the credit bureau Experian over credit report errors.Relaxing regulations on banking industries could become important as the field grows more crowded. Buy now, pay later apps have grown in popularity, as have peer-to-peer payment services. Social media platform X, which is owned by Musk, recently announced it was partnering with Visa to create a payment platform.Is Trump targeting the FDIC next?There has been speculation that as part of its agenda to remove regulations, DOGE could undermine or dismantle the Federal Deposit Insurance Corporation too. A recent government hiring freeze affected new hires at the FDIC, according to a Washington Post report.Created in the aftermath of the Great Depression to reassure Americans that banks were safe, the FDIC uses an industry-funded pool of money to cover losses in case of bank failures. Each depositor to a bank or credit union supported by the FDIC has their money insured up to $250,000 and this promise is backed by the US government."Unlike the CFPB, the FDIC has its own statutory power," said Bill Issac, former FDIC chairman. "It has a board of directors and its own funding from the banking industry. It would not be easy at all to dismantle the FDIC. And it would be a horrible move."Financial experts have warned that eliminating the FDIC could cause widespread disruption to the banking industry, potentially affecting not only consumer trust in financial institutions but also the value of the US dollar."If the FDIC is dismantled, all money in our banks would be at risk," Steele said.However, experts point out that for now, the FDIC remains in place, so bank deposits remain insured up to $250,000. If you bank with a federally insured credit union, your deposits are covered by the National Credit Union Administration.Related articlesHow Safe Are Banking Apps, Really?What Is FDIC Insurance and How Does It Work?Watch Out for These Devious Banking Scams