Elon Musk is waging war on a key check on his business empire

By Matt Egan, CNN

(CNN) — Elon Musk bought Twitter in 2022 with the hopes of turning it into “the everything app” that will let users zap money to each other and where they could eventually conduct their “entire financial world.”

Days after Musk attended President Donald Trump’s inauguration this year, Twitter, now known as X, made its first major step towards building a financial ecosystem. X CEO Linda Yaccarino announced the launch of a digital wallet and peer-to-peer payments platform in partnership with Visa, to be launched later this year.

Now, Musk is at the forefront of the effort to gut the primary federal financial regulator overseeing the payments business: the Consumer Financial Protection Bureau.

“RIP CFPB,” Musk posted on X last week, with a tombstone emoji.

Hours later, the Department of Government Efficiency (DOGE), which is led by Musk, deleted the CFPB’s X account and was granted access to the consumer watchdog’s systems, a person familiar with the matter told CNN. Since then, the CFPB’s acting director has instructed employees to “stand down” from all work – including fighting financial abuse.

All of this is alarming consumer advocates and ethics experts, who say there is a glaring conflict of interest between the world’s richest person simultaneously presiding over the shutdown of the CFPB while also owning businesses that would benefit from weakened financial regulation.

The White House said on Tuesday that Musk will file a financial disclosure. However, the document will be confidential. “As an unpaid special government employee who is not a commission officer, he will file a confidential financial disclosure report per the norm,” a White House official told CNN.

Richard Painter, a law professor at the University of Minnesota who was the chief ethics lawyer in the administration of President George W. Bush, told CNN in a phone interview that Musk must recuse himself from anything to do with the CFPB or risk violating criminal conflict of interest law.

“Elon Musk needs to stay away from the CFPB. That’s cut-and-dry,” said Painter. “If there is any evidence that he has participated in a matter with the CFPB, impeding the work there, then he has risked violating the statute. That’s a slam dunk.”

Concerns beyond X

Painter pointed to how the White House has said Musk is serving as a special government employee and noted the criminal conflict of interest law applies to all federal officials, except the president and the vice president.

“It applies to special government employees – everyone from the secretary of the defense to the janitor who orders toilet paper,” Painter said.

It’s not just Musk’s burgeoning payments business that has raised eyebrows. It’s also Musk’s best-known and most valuable company: Tesla.

Tesla has a financing arm that provides car loans – and the CFPB policies car loans. (The bureau does not regulate auto dealers, but it does oversee auto loans like the financing Tesla provides through its subsidiary Tesla Finance LLC.)

Tesla is on a list of securities that CFPB employees are banned from owning, according to a recent copy of the list viewed by CNN. That list includes obvious companies like JPMorgan Chase and US Bank as well as some automakers like Tesla that have a finance arm.

In other words, CFPB employees are not allowed to own Tesla stock, but Tesla’s largest shareholder is front-and-center as the CFPB is being dismantled.

“It’s absurdly ironic. It’s turning the notion of government by the people and for the people on its head,” said Christopher Peterson, a law professor at the University of Utah and former CFPB official who previously had been hired by the bureau as an expert witness.

Of course, it’s hard to know exactly how involved Musk himself is in paralyzing the CFPB versus his lieutenants and other administration officials.

But Musk has made his views clear, posting weeks after Trump’s victory: “Delete CFPB. There are too many duplicative regulatory agencies.”

Peterson said the comments from Musk make it unclear if a recusal would even work at this point.

“If the boss says, ‘CFPB RIP’ and that it should be deleted, recusal is a little late here. You already told everyone their marching orders,” Peterson said.

Neither X nor Tesla responded to requests for comment from Musk. The White House similarly did not respond to a request for comment on conflict of interest concerns.

The White House issued a statement on Monday arguing that the CFPB has “long functioned as another woke, weaponized arm of the bureaucracy that leverages its power against certain industries and individuals disfavored by so-called ‘elites.’”

“Under the administration of President Donald J. Trump, the weaponization ends right now,” the White House statement said.

Later President Trump, in answer to a reporter’s question, said his goal was to eliminate the CFPB, “Because we’re trying to get rid of waste, fraud, and abuse,” he said.

First of ‘many big announcements’

Kathleen Engel, a research professor at Suffolk University Law School, told CNN she is worried about who is protecting consumers from financial abuse if the CFPB is paralyzed, even momentarily.

“The CFPB is the cop on the beat. If you want the cops to stay away, you get rid of the police department,” said Engel, who served on an advisory board for the CFPB. “We’re talking about a real wild west situation.”

Engel said the “most obvious conflict of interest” for Musk is X and its ambitions to push into payments.

According to the CFPB, the bureau’s enforcement actions have resulted in nearly $20 billion of consumer relief potentially to about 195 million people.

“Elon Musk is trying to cripple an agency that is trying to protect consumers who he is trying to sell products and services to,” said Dennis Kelleher, CEO of Better Markets, a nonprofit that advocates for tougher financial regulation. “When they get ripped off, mom and pop on Main Street have no chance on their own fighting against these gigantic financial corporations.”

X announced in January 2024 that it would launch peer-to-peer payments, “showcasing the power of living more of your life in one place.”

According to X’s website, X Payments LLC is registered with the Financial Crimes Enforcement Network (FinCEN) as a money service business. X Payments has already received a license to transit money from 41 states.

Yaccarino said that the X Money Account will debut later this year and the Visa deal is just the “first of many big announcements about X Money this year.”

CNN’s Alayna Treene contributed reporting.

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