By Ray Birch
WASHINGTON—Will the CFPB halting its supervisory work open the door for Elon Musk to form a financial services company? And how would that affect payments competition?
Adam Rust, director of financial services for the Consumer Federation of America, contends Musk’s Department of Government Efficiency (DOGE) gaining access to CFPB data may eventually lead to an expansion of Musk’s businesses into payments.
Adam Rust
Rust said the private financial information Musk is obtaining now “will advance his plans to build a new payments platform on X. The company has received money transmitter licenses in more than 40 states and recently announced a partnership with VISA Direct. His vision is to create a Chinese-style super app in the United States. By sending DOGE workers into the CFPB and Treasury, Musk may be collecting and storing private routing and account numbers along with payment histories.”
Rust pointed out that like all networks, payments systems benefit from scale.
“Each additional participant in a network adds value to all of the existing members,” he said. “Building networks takes time, and companies usually invest substantial resources to acquire users. Musk is skipping that step by sending DOGE workers into Treasury and the CFPB. He has unimpeded access to take what he wants. Banks, credit unions, fintechs, and other financial companies could never do this. These illegal actions could jump start a new billion-dollar line of business for Musk.”
No Watchdog
Rust insisted that if the CFPB can’t do its job, no federal regulator will be able to prevent Musk from building a financial services company.
“This is an unprecedented action,” Rust said. “The Trump Administration already gave Elon Musk access to the Treasury’s payment system. Now he is being empowered to see private financial information about consumers and companies. An agency designed to protect people is being shredded to bring more profits to an out-of-control billionaire.”
Payments expert Tim Kolk contends the current environment in Washington could lead to a new payments platform.
“The networks, Visa, Mastercard, Amex and Discover, have decent protective ‘moats’ around their businesses—and strong regulation typically protects the incumbents. They also have the advantage of already routing so many transactions. So, getting away from them is tough, if not impossible.” said the TRK Advisors principal. “Notice how much the large banks hate regulation, except when, for example, fintech's started to emerge and all of a sudden, the big banks rea
Tim Kolk
lly wanted some regulation for them.”
New Platform Could Happen
Kolk stated that if the questionable actions of the current administration stand, “It very well could be that some new payments platform like what is being speculated from Musk could become actionable. Especially if the government somehow gives it preferential position. For example, if the government decided that all government distributions will travel across that network—such as Social Security payments, welfare support, maybe even government contracts...”
Kolk added that a new payments platform driven by Musk could happen.
“This is not an impossibility,” he said. “Two years ago would this have been considered a real risk to FIs? No. Today, the possibility seems not as remote.”