The Watchdog Is Dead. What Happens Now? 🏛️

Welcome to Advance Genie, the newsletter that helps operators in high-friction industries find smarter paths to capital.

16 of 34 enforcement actions dismissed. 90% of the supervision division was cut. 

Guidance documents rescinded. Headquarters closed. All regional offices shut down.

The agency refused to explain why.

Here's exactly what happened, who stepped in, and what it means for your access to capital.

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The CFPB Is Gone

The GAO documented the collapse in its first official report on the CFPB's reorganization.

When the GAO requested meetings and information, the CFPB refused to cooperate. 

The agency called the investigation "initiated at the behest of hyper-partisan Democrat Members" and declined every opportunity to provide its own data.

Then the White House went further. 

On February 18, the Council of Economic Advisers published a 16-page report estimating the CFPB has cost American consumers $237 to $369 billion since 2011. 

The CFPB's own claim: $21 billion returned to consumers over the same period.

Consumer groups challenged the math - financial academic Adam Levitin argued the CEA wrongly attributed interest rate differences to regulation rather than borrower risk. The National Consumer Law Center called it "unfounded claims."

The political reality doesn't depend on which number you believe because congress already acted. 

The reconciliation bill cut the CFPB's funding cap from 12% of Federal Reserve operating expenses to 6.5%. That's statute, not policy, it doesn't require a court ruling to stand.

And yesterday, the full en banc D.C. Circuit heard arguments on whether the remaining staff can be fired. 

The district court judge has written that the administration is "actively and unabashedly trying to shut the agency down" and that the CFPB "is hanging by a thread."

One number captures the situation. 

Consumer complaints to the CFPB rose 89% in December 2025 compared to December 2024.

More people are asking for help. Almost no one is left to answer.

New York Steps Into the Vacuum

The same week the White House published its cost estimate, a new law took effect 200 miles north.

On February 17, New York's FAIR Business Practices Act became enforceable to extend consumer-level protections to small businesses and non-profits. 

The New York Attorney General can now scrutinize merchant cash advance collection tactics, including aggressive demand letters and improper UCC-1 filings, under standards previously reserved for consumer debt.

The old rule required the AG to prove a practice was "consumer-oriented" before acting. The FAIR Act eliminates that requirement entirely.

And New York isn't acting alone.

Both California and New York revised their unfair and deceptive practices statutes in 2025. Massachusetts and Michigan are proactively revising consumer protection frameworks.

For operators who borrow through MCAs: the FAIR Act may actually provide new legal defenses against predatory collection tactics. 

If your funder is using aggressive methods, the New York AG now has clearer authority to intervene.

For MCA funders serving frontier industries: review your collection practices immediately. The enforcement authority that disappeared at the federal level just reappeared at the state level, with different rules in different states. 

The compliance environment didn't simplify. It fragmented.

$4 Billion Through Your Dashboard

While regulators fight over who watches the market, capital keeps flowing through channels that didn't exist a decade ago.

Shopify reported Q4 2025 earnings on February 11. Revenue hit $3.67 billion for the quarter, up 31% year over year, with full-year revenue at $11.56 billion.

The number that matters for operators: Shopify originated over $4 billion in merchant loans and cash advances in 2025, up 34% from $3 billion in 2024. 

Shopify Capital is now available in eight countries. Transaction and loan losses returned to approximately 3% of revenue, the company's consistent historical target.

That's $4 billion deployed in a single year through a platform that underwrites on sales data, not industry codes. No CFPB supervision required for that capital to reach merchants.

Shopify isn't an outlier. 

According to a PYMNTS/Green Dot study, 73% of surveyed firms now offer embedded lending capabilities. 93% offer some form of embedded finance.

The software tools operators already use are becoming capital sources. Your POS system. Your inventory management platform. Your payment processor. Each one is a potential lending channel that evaluates your actual transaction history rather than a paper application from six months ago.

And check your dashboards. There might be a financing offer sitting there right now.

What 11.5% Tells You About Frontier Capital

Platform lending is one end of the spectrum. 

At the other end, institutional capital is flowing into frontier industries at record scale.

According to S&P Global Ratings, private credit lending to B- and below-rated borrowers reached approximately $146 billion in 2025, exceeding broadly syndicated loans for the fourth consecutive year. 

The broader private credit market has reached $1.5 to $2 trillion, matching the syndicated loan market in total size.

Specialty finance was the most popular strategy for new fund launches in 2025: 84 funds, ahead of direct lending at 71. 

NYC-based Byzfunder reported 40% year-over-year growth using an AI underwriting engine that evaluates real-time cash flow rather than static scoring. The company claimed it approved businesses that competitors "couldn't underwrite."

Capital exists. The question is what it costs.

On February 19, Curaleaf Holdings closed a $500 million private placement of senior secured notes at 11.5% interest, maturing February 2029. 

It's the largest note offering in U.S. cannabis history.

The offering was oversubscribed. Ten first-time cannabis lenders participated. CEO Boris Jordan called it "a powerful endorsement of Curaleaf's strategy" and described the institutional demand as "a pivotal inflection point for the sector."

That's the positive story: a cannabis company raised half a billion dollars, demand exceeded supply, and new institutional investors entered the space for the first time.

Here's the other story.

Curaleaf's previous debt, issued in 2021, carried 8% interest. The new notes carry 11.5%. 

That's a 350 basis point increase. On $500 million, the difference in annual interest expense is $17.5 million.

That's the stigma premium. More lenders are entering the market. But frontier capital still costs more, and the gap is widening.

The cannabis debt wall tells the full story. Curaleaf addressed its $457 million maturity. Trulieve paid off $368 million in cash. Cresco Labs extended $325 million to 2030 at 12.5%. Verano Holdings is still negotiating on $350 million due October 2026.

Companies with clean books get capital. Companies with weak cash flow get sold. 

The landscape just shifted - less federal oversight, more state enforcement - more capital available than ever, through more channels than ever, at higher cost than operators would like.

Use the leverage while you have it.