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    Trump names Treasury Secretary Scott Bessent acting director of CFPB, as former head Chopra confirms he is out

    President Donald Trump appointed Treasury Secretary Scott Bessent the acting director of the Consumer Financial Protection Bureau, Bessent announced in a CFPB statement.
    Former Director Rohit Chopra posted a letter to Trump on social media platform X confirming that his term at the agency had “concluded.”
    Chopra was often at loggerheads with the U.S. banking industry after pushing to drastically rein in practices around credit card late fees and overdraft fees, among other efforts.

    Republican presidential nominee former President Donald Trump, left, listens as investor Scott Bessent speaks on the economy in Asheville, N.C., Wednesday, Aug. 14, 2024.
    Matt Kelley | AP

    President Donald Trump appointed Treasury Secretary Scott Bessent the acting director of the Consumer Financial Protection Bureau, Bessent announced Monday in a CFPB statement.
    Former Director Rohit Chopra on Saturday had posted a letter to Trump on social media platform X confirming that his term at the agency had “concluded.”

    Bessent, a former hedge-fund manager who was confirmed as head of the U.S. Treasury on Jan. 27, will presumably lead the CFPB until a permanent pick is named.
    “I look forward to working with the CFPB to advance President Trump’s agenda to lower costs for the American people and accelerate economic growth,” Bessent said in the statement Monday.
    Chopra, who was appointed by former President Joe Biden in 2021, was often at loggerheads with the U.S. banking industry after pushing to drastically rein in practices around credit card late fees and overdraft fees, among many other efforts. Trade groups representing banks fought these regulations in court, fending off rules that would have saved Americans billions of dollars in fees but that the industry called poorly considered or unjustified.
    Banking groups had expected Chopra to be fired as soon as Trump was inaugurated, but Chopra remained on for nearly two weeks into Trump’s second term, continuing to fire off releases and weighing in on hot-button topics, including whether banks unfairly closed accounts.

    While Chopra’s term was scheduled to run for roughly another two years, a 2020 Supreme Court ruling gave the president the power to fire the agency’s head at will.

    Chopra said in the letter he tweeted Saturday that he saw a path for the next CFPB leader to enact “meaningful reforms,” including a possible cap on credit card interest rates.
    The CFPB was created in the aftermath of the 2008 global financial crisis, which was caused in part by banks’ irresponsible lending and securitization practices.
    But the agency has since been targeted by trade groups who unsuccessfully argued that the CFPB’s funding violated the U.S. Constitution, and more recently by conservative figures including X owner and Trump advisor Elon Musk, who has called for the elimination of the CFPB.
    The Consumer Bankers Association said Monday it was “pleased” by Bessent’s appointment at the CFPB and that Bessent should take steps to reverse “partisan policies” made under Chopra.
    “We’re hopeful that Secretary Bessent will take into account the real-world ramifications regulations have on America’s leading banks, the millions of consumers they serve, and the economy as a whole,” said CBA President Lindsey Johnson. More

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    How Trump’s tariff turbulence will cause economic pain

    DONALD TRUMP took North America to the precipice of a trade war over the weekend. On February 3rd he cooled things down, delaying tariffs on Canada and Mexico by a month as the countries attempt to reach a deal that may involve everything from immigration controls to trade concerns. The sudden about-turn underscored Mr Trump’s reputation as an agent of chaos who uses extreme threats to wrest concessions out of others. It is a dangerous game that can just as easily lead to miscalculations and corrosive uncertainty for the global economy. More

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    Trump tariffs could raise medication costs and exacerbate shortages, drug trade groups warn

    President Donald Trump’s steep tariffs on Canada, Mexico and China could worsen exist­ing drug short­ages in the U.S. and raise health-care costs for patients, some drug trade groups warn. 
    They also said the import taxes could strain cash-strapped generic drugmakers and distributors.
    Trump on Saturday announced he would impose a 25% tariff on nearly all goods shipped from Canada and Mexico and a 10% charge on imports from China.

    Shana Novak | Stone | Getty Images

    President Donald Trump’s steep tariffs on Canada, Mexico and China could worsen ex­ist­ing drug shortages in the U.S., raise health-care costs for patients and threaten cash-strapped generic drugmakers, some drug trade groups warn.
    Trump on Saturday announced he would impose a 25% tariff on nearly all goods shipped from Canada and Mexico and a 10% charge on imports from China, all of which were set to take effect on Tuesday. On Monday, both Mexico and Canada said the tariffs would be paused for about a month.

    Still, the proposed import taxes come as the U.S. grapples with an unprecedented shortfall of crucial medicine ranging from injectable cancer therapies to generics, or cheaper versions of brand-name medicines, which has forced hospitals and patients to ration drugs. It also comes as many Americans struggle to afford the high costs of prescription medications. 
    The U.S. relies heavily on other countries for pharmaceutical products, especially for generic drugs. Those medications make up 90% of Americans’ prescriptions, so tariffs could potentially threaten many patients’ access to affordable treatments. 
    China in particular is a large supplier of active pharmaceutical ingredients, or APIs, for both brand-name and generic drugs due to lower manufacturing costs in the country. APIs are the main component of a drug that causes the desired effect of the treatment. Some generic drugs are manufactured overseas entirely.  
    The tariffs could “increase already problematic drug shortages” by forcing generic manufacturers out of the market due to low profit margins, according to a statement from John Murphy, CEO of the Association for Accessible Medicines, which represents generic pharmaceutical companies. 
    “Generic manufacturers simply can’t absorb new costs,” Murphy said Sunday. “Our manufacturers sell at an extremely low price, sometimes at a loss, and are increasingly forced to exit markets where they are underwater.” 

    He urged the Trump administration to exempt generic products from tariffs, adding that the overall value of all generic sales in the U.S. has decreased by $6.4 billion in five years despite “growth in volume” and new generic drug launches. 
    The Healthcare Distribution Alliance, which represents 40 drug distributors, has also called for the Trump administration to reconsider including pharmaceutical products in tariffs. In a statement Sunday, the group said tariffs would strain the pharmaceutical supply chain and “could adversely affect American patients,” whether that is through increased medical product costs or manufacturers leaving the market. 
    The group said the tariffs will put additional pressure on an industry already in financial distress, noting that distributors operate on low profit margins of just 0.3%.
    The U.S. will likely see “new and worsened shortages of important medications,” and those costs will be “passed down to payers and patients, including those in the Medicare and Medicaid programs,” the Healthcare Distribution Alliance said. 
    An estimate from The Budget Lab at Yale University said long-term prices of pharmaceutical products in the U.S. will be 1.1% higher after shifts in the supply chain. 
    Pharmaceutical Research and Manufacturers of America, which represents pharmaceutical companies, said in a statement that it shares Trump’s goal of ensuring the U.S. maintains its “global leadership in biopharmaceutical innovation and manufacturing.”
    Trade measures should focus on “addressing unfair practices abroad and safeguarding our intellectual property,” the group added.

    Medical devices

    The U.S. also relies on overseas manufacturing for medical devices, with many key components and finished products being sourced from countries such as China, Mexico and India.
    For example, Intuitive Surgical, which manufactures robotic surgical systems, disclosed in its annual report last week that a “significant majority” of the company’s instruments and accessories are manufactured in Mexicali, Mexico. 
    Tariffs on the country would “increase the costs of our products manufactured in Mexico and adversely impact our gross profit,” the company said. 

    More CNBC health coverage

    AdvaMed, the largest medical device association globally, urged the Trump administration to exempt medical products from the tariffs. In a statement, the group said import taxes could lead to shortages of critical medical technologies, higher prices for patients and payers, and less investment in research and development. 
    The tariffs and associated costs essentially function as “an excise tax in practice,” AdvaMed said, noting that Trump provided a carve-out for much of the medical technology sector when he imposed tariffs on China during his first term. 
    Tariffs could also impact hospitals, which rely on imports for everyday supplies, such as gowns, gloves and syringes, along with bigger items such as X-ray equipment. 
    But the American Medical Manufacturers Association, which advocates for U.S. businesses that produce medical personal protective equipment, or PPE, supports the tariffs on China and increasing domestic production of those products. 
    In a statement Monday, the group said the tariffs recognize that China has “not changed its ways and continues to engage in anti-competitive and hazardous behavior that harms U.S. PPE and medical supply manufacturers and threatens our supply chains and national security.”

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    New tariffs could raise home prices and sideline potential buyers

    Tariffs on key building materials sourced from Canada and Mexico could make homes more expensive and freeze out buyers.
    President Donald Trump put 25% tariffs on goods from the two key trading partners, but later delayed duties on Mexico by a month.
    Home prices are already at record highs, and Trump’s mass deportation plans could further pressure the market by reducing the construction labor force.

    The U.S. housing market was already struggling under the weight of high mortgage interest rates, a low supply of existing homes for sale and historically high home prices.
    Now tariffs on building materials are adding even more pressure.

    About 30% of softwood lumber consumed in the U.S. is imported, largely from Canada. Wallboard, known as gypsum, is imported from Mexico. The 25% tariff President Donald Trump levied on goods from the two key trading partners will make those products that much more expensive. The Mexico tariffs were postponed Monday for a month, but they are still on the table.
    “More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum — come from Canada and Mexico, respectively,” Carl Harris, chairman of the National Association of Home Builders, wrote in a release. “Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices.”
    Home prices are already up well over 40% since the start of the pandemic and were still 3.8% higher in November, compared with the previous November, according to the latest read from the S&P Corelogic Case-Shiller national home price index. That annual increase was higher than the 3.6% in October.
    Duties on building materials could make the market even harder for buyers.
    “We believe this could make worse the affordability crisis for first-time buyers,” wrote Jaret Seiberg, housing policy analyst for TD Cowen Washington Research Group. “On the plus side, it could increase pressure on Congress to enact policies that encourage more entry-level construction including expanded tax credit programs.”

    Prospective home buyers leave a property for sale during an Open House in a neighborhood in Clarksburg, Maryland.
    Roberto Schmidt | AFP | Getty Images

    The NAHB is asking the Trump administration to exempt building materials from the 25% tariffs, noting his executive order on the first day of his presidency that sought to “expand housing supply.”  
    While the U.S. has ramped up lumber production in recent years, 70% of the country’s sawmill and wood product imports — $8.5 billion — come from Canada. They are already subject to a 14.5% tariff, so Trump’s new policy would raise it to over 39%.
    And 71% of lime and gypsum product imports are from Mexico, totaling $352 million. Other materials, such as steel and appliances, are sourced from China. Trump put an additional 10% tariff on goods from China on Saturday.
    New duties on imports from China, Canada and Mexico could raise construction material costs by $3 billion to $4 billion if they all take effect, affecting builders’ ability to complete projects, according to the NAHB.
    The tariffs are likely to hit smaller homebuilders with tighter margins harder, but big builders are not immune.
    “Even with a smaller portion of our lumber coming from Canada, and some materials from Mexico, we will all be affected — which, in turn, can impact consumers and their ability to purchase a home in the short-term,” said Sheryl Palmer, CEO of Arizona-based homebuilder Taylor Morrison. “In a time where some consumers are still struggling to overcome higher interest rates, my sincere hope is that these will be short-lived.”
    Builders are already contending with a labor shortage that is only getting worse after the Trump administration started mass deportations of undocumented immigrants. Roughly 30% of construction workers are estimated to be immigrants, and a significant share of those workers are undocumented, according to the National Immigration Forum, an immigration advocacy group.
    “You can run them all out of the country, but who’s going to build houses?” said Bruce McNeilage, CEO of Nashville-based Kinloch Partners, a single-family rental home developer.
    While the bulk of the effect of tariffs is on new housing construction, the existing market could also feel the effects. If the costs of other consumer goods increase, all potential buyers will have less spare cash to save for a down payment.
    There was also an expectation that interest rates would fall this year, but if inflation heats up again due to the tariffs, rates could even rise. This layering of both economic realities and emotional perceptions of personal wealth could hit the all-important, upcoming spring market hard. More

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    Stocks that got hit the most from Trump’s tariffs before the Mexico reprieve

    U.S. President Donald Trump hold up an executive order, “Unleashing prosperity through deregulation,” that he signed in the Oval Office on January 31, 2025 in Washington, D.C., while also speaking to reporters about tariffs against China, Canada and Mexico.
    Chip Somodevilla | Getty Images News | Getty Images

    The U.S. stock market was rocked Monday after President Donald Trump kicked off a possible global trade war. Shares of companies spanning the auto, industrial, retail and beverage industries with international supply chains were hit particularly hard.
    Trump on Saturday slapped a 25% tariff on goods from Mexico and Canada, while adding a 10% levy on imports from China. The president said Monday that he’s pausing the Mexico tariffs for one month after Mexican President Claudia Sheinbaum agreed to immediately send 10,000 soldiers to her country’s border to prevent drug trafficking. Trump also ramped up his tariff threats to the European Union.

    Tariffs could not only increase the cost of transporting goods across borders, they could also disrupt supply chains and crimp business confidence. Goldman Sachs warned that Trump’s latest action could cause a 5% sell-off in U.S. stocks due to the hit to corporate earnings. Here are some of the most affected industries and stocks:
    Automakers
    These tariffs could have a material impact on the global automotive industry, which has a heavy reliance on manufacturing operations across North America.
    Detroit’s big three car makers — General Motors, Ford, and Stellantis — could feel the pain from disrupted supply chains as a result of tariffs and may be forced to shift production from foreign factories to the United States.

    Automakers getting crushed

    Food and beverage
    Constellation Brands, a large importer of alcohol from Mexico, is leading a sell-off among booze stocks.
    Canada has threatened to pull American alcohol from its government-run liquor shelves in response to Trump’s 25% tariffs.

    Restaurant chain Chipotle Mexican Grill and avocado company Calavo Growers could feel the pain from more costly supplies, as these companies import avocados from Mexico.
    Retailers
    Sportswear brands Nike and Lululemon could be vulnerable to Trump’s tariffs because of their heavy reliance on Chinese imports, including fabrics. Their sizable business in China could also be hurt by the negative sentiment from the trade war.
    Discount retailers such as Five Below and Dollar General could be among the hardest hit businesses, as imports from China usually make up a significant portion of their sales. Another victim could be Canada Goose, a Canada-based luxury outerwear firm.

    Retailers getting hit

    Railroads
    Tariffs could be damaging to railroad operators, as heavy duties could slow the flow of goods being transported to the U.S., hurting their revenue and profits.

    Stock chart icon

    Union Pacific

    Union Pacific Corporation moves freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada and Mexico. Norfolk Southern and Canadian Pacific Kansas City are also exposed to the tariffs.  
    Chinese e-commerce
    Trump’s tariffs also targeted a trade provision that helped fuel the explosive growth of budget online retailers, including Temu. The orders against China, Canada and Mexico all halt a trade exemption, known as “de minimis,” which allows exporters to ship packages worth less than $800 into the U.S. duty-free.
    PDD Holdings-owned Temu and Alibaba’s AliExpress may no longer be able to take advantage of the loophole to sell cheap apparel, household items and electronics.

    Stock chart icon

    PDD Holdings More

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    Trump’s tariffs could threaten Hollywood production, box office recovery

    Trump’s import tariffs could threaten a long-standing relationship between Hollywood and Canada.
    Some fear that a trade war with Canada could cause the U.S.’ northern neighbor to retaliate, potentially rescinding sought-after tax credits for film productions or closing stages to U.S. studios altogether.
    Concerns are growing that higher tariffs across sectors could affect moviegoers’ wallets and in turn threaten box office sales.

    The Hollywood sign in Los Angeles on Jan. 22, 2024
    Mario Tama | Getty Images News | Getty Images

    LOS ANGELES — President Donald Trump just launched a trade war with Hollywood’s best friend.
    Known as Hollywood North, Canada has been a bustling production hub for American film and television series for decades. In addition to offering an enticing tax credit for stateside studios, the country has developed a top-notch workforce of industry talent in front of and behind the camera.

    Trump’s import tariffs on Canadian goods could threaten that relationship, Hollywood insiders told CNBC.
    Some fear that a heightened trade war with Canada could cause the U.S.’ northern neighbor to retaliate in ways that would hurt film production, potentially rescinding those sought-after tax credits or closing stages to U.S. studios altogether. Others believe the relationship between Hollywood and Canada is strong enough, and lucrative enough, to withstand Trump’s levies.
    “No one — on either side of the border — wants to see American tariffs on Canadian goods,” Canadian Prime Minister Justin Trudeau wrote on social media site X on Friday, promising a “forceful and immediate response.”
    On Saturday, Trump announced 25% tariffs on most goods from Mexico and Canada, as well as a 10% duty on goods from China. Trudeau immediately slapped retaliatory tariffs on American goods, saying, “Like the American tariffs, our response will also be far-reaching.”
    Trump’s tariffs could put pressure on production budgets, according to industry insiders, particularly for films and television shows that import certain textiles for costuming or unique construction materials such as specialty glass from outside the U.S.

    However, most studios source materials locally to their productions. It is rare for a Los Angeles-based set to bring in lumber from Canada, for example. Films and TV shows filmed in other countries will predominantly use supplies in those locations or ship them from the U.S. This includes food used in catering, which could see a slight uptick in price because of tariffs, but likely will not alter budgets too much.
    Additionally, many of the line items on the typical production budget are rented. Lighting, cameras and other production equipment come from studio warehouses and are leased for the duration of the shoot, insolating production costs from higher levies to an extent.

    Squeezing consumers

    Still, concerns are growing that higher tariffs across sectors could affect moviegoers’ wallets and in turn threaten box office sales.
    Companies importing goods into the U.S. from these affected countries are expected to pass additional costs onto consumers, raising the cost of hundreds of common household goods. Film industry members who spoke to CNBC said they were worried that if customers start to tighten their purse strings, trips to the theater could be among the expenses that get cut.
    Hollywood has only just begun to rebound after Covid-19 pandemic production shutdowns were exacerbated by dual labor strikes. Now, even if studios are able to improve the cadence of theatrical releases, there is concern that moviegoers will not have the discretionary income to see new films and buy popcorn.
    If that reality bears out, the whole industry could suffer.
    Ultimately, industry experts told CNBC that Hollywood will navigate whatever consequences come from Trump’s tariffs. However, it likely will have a harder time dealing with any pullback in consumer spending.
    The hope is that even if prices spike, blockbuster films set for release in 2025 will be enough to drive ticket sales and foot traffic.

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    Alphabet-backed fintech GoCardless halves losses, targets first annual profit in 2026

    British payments startup GoCardless reported a net loss of £35.1 million ($43.8 million) in the full year ending June 2024.
    GoCardless CEO Hiroki Takeuchi said its his aim for the company to post its first full-year profit in 12 to 18 months’ time.

    Hiroki Takeuchi, co-founder and CEO of GoCardless.
    Zed Jameson | Bloomberg | Getty Images

    Financial technology unicorn GoCardless more than halved losses in 2024 and said it’s aiming to reach full-year profitability by 2026.
    The London-based startup, which helps businesses collect recurring payments such as subscriptions, reported a net loss of £35.1 million ($43.8 million) in the full year ending June 30, 2024.

    That was a 55% improvement from the £78 million GoCardless lost the year prior.
    The firm noted that “restructuring activity” at the end of the full year ending June 2023 contributed to a reduction in operating losses in 2024. In June 2023, GoCardless announced it was cutting 15% of its global workforce. That took GoCardless’ salary expenses down 13% to £79.2 million in the company’s 2024 fiscal year.
    Still, while this improved the company’s financial picture, GoCardless’ CEO Hiroki Takeuchi told CNBC that revenue growth also helped significantly.
    “We’re much more focused on the cost side … We want to be getting very efficient as we scale,” Takeuchi said in an interview last week. “But we also need to continue growing. We need both of those things to get to where we want to be.”
    GoCardless grew revenue by 41% to £132 million in full-year 2024. Of that total, £91.9 million came from customer revenue.

    Last year also saw GoCardless record its first-ever month in profit in March 2024. Takeuchi said its his aim for GoCardless to post its first full-year profit in 12 to 18 months’ time, adding it’s “well on track” to do so.

    ‘No plans’ to IPO

    Back in September, GoCardless acquired a firm called Nuapay, which helps businesses collect and send payments via bank transfer.
    Asked whether GoCardless is considering further mergers and acquisitions in future, Takeuchi said the firm is “actively looking,” adding: “We’re seeing lots of opportunities come up.”
    Following its acquisition of Nuapay, Takeuchi said GoCardless is currently testing a new feature that allows clients to distribute funds to their own customers.
    “If you take something like energy, the vast majority of the payments are about collecting money,” he told CNBC.
    “But then you might have some of your customers that have solar panels on their roof and they’re sending energy back to the grid, and they need to get paid for that energy that they’re generating.”
    GoCardless, which is backed by Alphabet’s venture arm GV, Accel and BlackRock, was last privately valued by investors at $2.1 billion in February 2022.
    Takeuchi said the firm had no need for external capital and that there are “no plans” for an initial public offering in the near term.
    Fintechs have been watching Swedish fintech Klarna’s plan to go public closely — but many are waiting to see how it goes before deciding on their own plans.
    With technology IPOs at historic lows, several startups have instead opted to provide employees and early shareholders liquidity by selling shares in the secondary market.
    In November, Bloomberg reported that GoCardless had chosen investment bank Lazard to advise it on a $200 million secondary share sale. GoCardless declined to comment on the report. More

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    L.A. wildfire victims face financial anxiety amid recovery: ‘The uncertainty is very unsettling’

    The Los Angeles wildfires that started on Jan. 7 are likely to be the costliest in U.S. history.
    Residents impacted by the Palisades Fire and the Eaton Fire now face ample financial questions and worries, tied to issues like homeowners insurance and relocation.
    It will take time to sort out many of their concerns.

    Homes burn above Pacific Coast Highway during the Palisades Fire on Jan. 8, 2025, in Pacific Palisades, Calif. 
    Photo by Jeff Gritchen/MediaNews Group/Orange County Register via Getty Images

    Alicia Kalvin awoke the morning of Jan. 7 to an urgent text from a friend: “There’s a fire on your street.” She hurried outside, alarmed to see red skies and low-flying planes dumping water.
    “I have to get out of here,” thought Kalvin, 53, who lives in the Pacific Palisades of Los Angeles.

    Back inside, she glanced out the bathroom window and saw a hellish scene unfolding. It was a neighbor’s house engulfed in flames, embers spewing into her own yard.
    Kalvin frantically threw on clothing. She grabbed her purse, her dog, a can of dog food and her mother’s ashes before fleeing her childhood home. She didn’t get an evacuation warning.
    Flames licked the hills of the Los Angeles enclave as Kalvin drove away. She says she’s had nightmares ever since.
    Three days later, she returned to the area with a police escort.
    “I promised myself I wouldn’t look, but of course I looked,” said Kalvin. “It looks like 10 nuclear bombs went off. The whole neighborhood was just leveled — markets, churches, schools. It looked like a war zone.”

    A mobile home park is destroyed during the Palisades Fire on Jan. 8, 2025. 
    Jeff Gritchen/MediaNews Group/Orange County Register via Getty Images

    In one sense, Kalvin is lucky because her home, somehow, is still standing.
    But questions about her financial future abound — as they do for thousands of L.A. residents whose lives were upended by the recent wildfires.
    There’s significant damage to Kalvin’s home. Some sections of the exterior, including the roof, are scorched; the landscaping and artificial lawn are destroyed; the interior smells of smoke; and ash, blown in through broken windows, blankets the hallways, Kalvin said.
    She’s trying to untangle what her home insurance policy — the California FAIR plan, the state’s insurer of last resort, which steps in when residents can’t obtain coverage elsewhere — might cover.
    “I’m very concerned at how much I’m going to have to spend if and when I fix up this house,” said Kalvin, who is single and doesn’t have kids. “Because insurance won’t cover everything.”
    Even before the Palisades Fire, Kalvin faced financial challenges.
    Work has dried up in Hollywood in recent years; Kalvin — an educator hired to teach child actors on television, movie and commercial sets — has had trouble finding gigs. She collects unemployment some weeks and funds income shortfalls with savings originally earmarked for retirement.
    “My future is very up in the air,” she said. “And the uncertainty is very unsettling.”

    ‘There are no answers right now’

    Patrick O’Neal sifts through the remains of his home after it was destroyed by the Palisades wildfire, in Malibu, California, Jan. 13, 2025.
    Brandon Bell | Getty Images

    The recent wildfires that erupted in Greater Los Angeles — fueled by hurricane-force winds and exceptionally dry conditions, exacerbated by climate change — are estimated to be among the costliest in U.S. history. They’ve killed at least 29 people.
    AccuWeather estimates the blazes caused more than $250 billion in total damage and economic loss.
    S&P Global Ratings projects the L.A. fires will cause roughly $40 billion of insured losses. That sum would exceed the roughly $13 billion of the Camp Fire in Paradise, Calif., in 2018, which was the costliest blaze in U.S. history.
    “There are all sorts of costs associated with a disaster,” said Andrew Rumbach, a senior fellow at the Urban Institute who studies household risk to natural hazards and climate change.
    “They pile up, and many Americans don’t have a [financial] cushion to rely on,” Rumbach said. “Our main way of dealing with that as an economy is going into debt. That lingers for a long time.”

    The fires, largely contained, were still burning as of Thursday.
    The blazes — the largest being the Palisades and Eaton Fires — have scorched more than 50,000 acres, an area exceeding the size of San Francisco, and destroyed more than 16,000 structures.
    Most of those structures have been residential houses, S&P Global Ratings analysts wrote in a recent note.
    The disaster pushed thousands of L.A. residents into one of the nation’s most expensive housing markets overnight. They were left with countless financial questions, compounding deep emotional scars: Considerations like where to live, how to clean up, whether to rebuild — and how to afford it all.
    “Individuals are dealing with insurance, mortgages, the replacement cost of belongings, temporary housing,” said Sam Bakhshandehpour, 49, who’s lived in the Pacific Palisades for 13 years. “There are lots of near- and long-term variables and frankly there are no answers right now.”

    I’m very concerned at how much I’m going to have to spend if and when I fix up this house. Because insurance won’t cover everything.

    Alicia Kalvin
    Pacific Palisades resident

    Bakhshandehpour, an investment banker turned restaurateur, said the extent of damage to his home is unclear.
    He wants to continue living in the Palisades, which he calls an “oasis” in L.A. — but acknowledges cleanup of debris and toxic materials and repair to local infrastructure “could be years.”
    Indeed, the recovery period for L.A. residents could be two to five years or longer, Rumbach estimates.
    Some residents may never be able to move back.
    “Even if there is a desire on the part of the homeowners [to rebuild], it is unclear as to whether the land will be re-zoned such that it can no longer be developed,” according to S&P Global Ratings.

    A ‘massive’ financial drain

    Bakhshandehpour was able to find an unfurnished apartment in the interim. But furnishing a home from scratch has been a “massive” financial drain, he said.
    There are some financial backstops that can help allay such displacement costs.
    For example, victims may qualify for FEMA assistance. Applicants can get up to $770 upfront for basic needs like food and shelter while the government vets their application for more aid, potentially worth tens of thousands of dollars.

    During a state of emergency, California law also requires home insurers to issue a cash advance worth at least 30% of a policyholder’s “dwelling” insurance limit, up to $250,000, without filing an itemized claim. They must also advance at least four months of coverage for living expenses.
    “There is no comparison to the dollars you get from a home insurance policy,” said Amy Bach, executive director of United Policyholders, a nonprofit consumer advocacy group. “It has long been the most important source of funds to repair and rebuild, much more than any government program, for the vast majority of people.”
    Some insurers are paying policyholders even more than the law demands, Ricardo Lara, the California insurance commissioner, said Jan. 23. However, others “are not adhering” to those consumer protections, Lara said.

    Only a ‘ghost town hellscape’ remains

    Melted lawn chairs are seen near the remains of a burnt home after the Palisades Fire. 
    Agustin Paullier | Afp | Getty Images

    The rules on advance insurance payments only apply for policyholders with a “total loss.”
    But Julia Pollak’s home is considered a “partial” loss. Her insurer, State Farm, paid a $15,000 advance on the home’s contents and also authorized coverage for two months of living expenses. Both amounts are less than guarantees for those with a total loss.
    Her house, in the Marquez Knolls part of the Pacific Palisades, is damaged but still standing — a white home now surrounded by “wasteland,” she said.
    “There’s a row of seven houses standing. All the rest are gone,” said Pollak, a labor economist. “My house now looks out on a ghost town hellscape.”
    She and her family — a husband and four kids, including a newborn — are in limbo in many respects.

    For one, the insurance proceeds they’ve received so far aren’t enough to commit to a long-term lease, Pollak said.
    “I looked into liquidating my 401(k) for emergency purposes, but the tax consequences are not very nice,” Pollak said. “So, I’m going to try not to do it.”
    Thus far, the family has hopped from AirBnb to AirBnb. They don’t know where they’ll live after Feb. 5, when their current rental expires on a two-bedroom in Santa Monica.
    More from Personal Finance:How climate change is reshaping home insurance in the U.S.7 steps homeowners and renters should take after a wildfireWildfire victims may receive a one-time $770 payment
    State Farm urged Pollak to use its third-party vendor to find future temporary housing — a cost the insurer would pay for directly, rather than via reimbursement. As of Thursday, Pollak was awaiting approval for certain properties she’d identified. She worries they’ll be snapped up in the interim.
    “As Feb. 5 approaches, I am getting pretty nervous,” she said.
    Then, there are longer-term questions.
    The back side of their home is scorched. Everything inside reeks of smoke; various consultants have warned the smell won’t disappear unless insulation and ducting is replaced. Contractors have recommended a “full gut” and a replacement of all porous, hard-to-clean items like carpets, couches and upholstered beds, Pollak said. They must wait for the insurer’s determination.

    To stay or to go?

    There’s an additional tension here: It may be difficult to stay in the Palisades, but it’s also financially difficult to leave.
    Pollak and others she knows whose homes are still standing worry insurers will deem their homes livable in a few months. She wonders, would they be residing in a construction zone for five years with no neighbors, businesses or schools nearby?

    Emergency vehicles are on the side of the road as flames from the Hughes Fire race up the hill in Castaic, a northwestern neighborhood of Los Angeles, California, on January 22, 2025.
    Frederic J. Brown | Afp | Getty Images

    Pollak and her husband bought their home in 2019 for about $2.75 million. Its value had grown to about $3.8 million before the wildfires, according to a Redfin estimate — the family’s biggest financial asset.
    Now, they likely can’t sell or rent it for anything close to pre-fire value, Pollak said.
    “Ideally, we’d keep it and enjoy it in five to 10 years when it blossoms again,” Pollak said. “But the carrying costs are so high that we can’t pay the mortgage without living there and also pay for comparable accommodation elsewhere.” 

    An uncertain future

    Search and rescue members work with firefighters through residential damage from the Eaton Fire as wildfires cause damage and loss through LA region on Jan. 14, 2025 in Altadena, California.
    Benjamin Fanjoy | Getty Images

    For all she and her family have endured, Pollak considers herself lucky: At least they have insurance.
    Many insurers have stopped writing policies in California or limited their exposure due to wildfire risk. Homeowners who lost coverage may not have renewed it, while others may have foregone insurance altogether in the face of higher premiums — and those rates will likely increase in the future after the L.A. fires, said S&P Global.
    Two-thirds or more of L.A. fire victims will find they were underinsured, said Bach of United Policyholders. That means their insurance policy won’t cover the full cost of rebuilding or repairing property.
    For example, 36% of victims who filed insurance claims after the 2021 Marshall Fire in Boulder County, Colorado, were “severely” underinsured, according to a recent study by researchers at the University of Colorado Boulder and University of Wisconsin-Madison.
    Their coverage was less than 75% of the actual cost to fix their home, the study found. That means policyholders rebuilding a $1 million home would need an extra $250,000 or more out of pocket, Tony Cookson, finance professor at the University of Colorado Boulder and a co-author of the study, said in a statement.

    My house now looks out on a ghost town hellscape.

    Julia Pollak
    Pacific Palisades resident

    State Farm, the state’s largest insurer, dropped Kalvin, the L.A. resident and teacher, in July 2024. She switched to the California FAIR Plan.
    The policy has more meager coverage than her former policy, Kalvin said. She’s filed an insurance claim but hasn’t yet received any funds. As of Thursday, an insurance adjuster hadn’t yet been assigned to her case.
    For now, her basic needs are being met. Kalvin is staying with a friend in Santa Monica and doesn’t have a mortgage on her Palisades home. While her bills are limited — largely for groceries, and health and auto insurance — she feels stretched given it’s been hard to get more than two days of work per week.
    She doesn’t know what her future holds — and whether it will be in the Palisades.
    “I probably would continue living there, because I have such love for the Palisades,” she said. “It’s home. But it’s so changed now. And I don’t know how I would feel.” More