The Consumer Financial Protection Bureau (CFPB) has experienced a flurry of activity over the past few weeks beginning with President Trump’s dismissal of Rohit Chopra as the Director of the Bureau on January 31. That same day, President Trump designated Scott Bessent, who had recently been sworn in as Secretary of the Department of Treasury, as Acting Director of the CFPB. A days later, on February 3, CFPB employees were instructed by e-mail to immediately cease much of the CFPB’s work unless it had been expressly approved by the Acting Director or by law. The e-mail also instructed CFPB employees not to commence or settle enforcement actions, nor issue any public communications of any type. According to the e-mail, the directive was made in order “to promote consistency with the goals of the administration.” On February 7, President Trump appointed Russell Vought, who had been confirmed by the Senate on February 6, to lead the Office of Management and Budget, as the new Acting Director of the CFPB. That same day, Elon Musk took to X with a two-word tweet that could be a foreshadowing of the administration’s true, or at least initial, intent for the agency: “RIP CFPB.”
The next day, Acting Director Vought quickly picked up where former Acting Director Bessent left off. He sent an e-mail to all CFPB employees on the evening of Saturday, February 8, expanding upon the February 3 e-mail and directing CFPB employees to cease supervisory and enforcement immediately unless expressly approved by himself or required by law. The directive specifically instructed CFPB employees to:
- “Not approve or issue any proposed or final rules or formal or informal guidance.
- Suspend the effective dates of all final rules that have been issued or published but that have not yet become effective.
- Not commence, take additional investigative activities related to, or settle enforcement actions.
- Not open any new investigation in any manner, and cease any pending investigations.
- Not issue public communications of any type, including publication of research papers and compliance bulletins.
- Not approve or execute any material agreements, including related to employee matters or contractors.
- Not make or approve filings or appearances by the Bureau in any litigation, other than to seek a pause in proceedings.
- Cease all supervision and examination activity.
- Cease all stakeholder engagement.”
Later that evening, Acting Director Vought published a message to X in which he addressed the CFPB’s funding and summarized a letter that he sent to Federal Reserve Chairman Jerome Powell to that regard. In the post, Vought averred that “the CFPB will not be taking its next draw of unappropriated funding,” and that the “Bureau’s current balance of $711.6 million is in fact excessive in the current fiscal environment.” As Vought stated in his letter to Powell, he had “determined that no additional funds are necessary to carry out the authorities of the Bureau for Fiscal Year 2025.”
The next night, on Sunday, February 9, Acting Director Vought directed the CFPB to close its headquarters for the coming week and instructed CFPB employees and contractors to work remotely. Later that evening, the National Treasury Employees Union (NTEU), which represents employees at the CFPB, filed two separate lawsuits against Acting Director Vought. In the first lawsuit, the NTEU seeks to enjoin Vought’s directive to cease CFPB work, arguing that the directive is a violation of the principals of the separation of powers and that only Congress has the power to create or destroy executive branch agencies and dictate their missions. In the second lawsuit, the NTEU seeks to enjoin the CFPB from granting the Department of Government Efficiency (DOGE) access to employee records and information, arguing that any such disclosure is in violation of the Privacy Act, which prohibits CFPB from disclosing employee records without employee consent.
Days later, on Tuesday, February 11, it was reported that CFPB Enforcement Director Eric Halperin and CFPB Supervision Director Lorelei Salas both resigned, after internal CFPB emails were accessed by the media. In those emails, Halperin and Salas suggested that the Trump administration’s directive to halt the work of the CFPB was the catalyst for their decisions to resign. However, according to the White House Office of Management and Budget (OMB), Halperin and Salas had both been placed on administrative leave for alleged insubordination.
That same day, Trump nominated Jonathan McKernan, a former member of the of the board of directors for the Federal Deposit Insurance Corporation (FDIC), to lead the CFPB. This nomination signals that perhaps the administration may not be gearing up to dismantle the CFPB entirely, but rather have it continue to function in a more limited capacity similar to how it operated during President Trump’s first administration. McKernan joined the FDIC board in January 2023 where he sought tougher scrutiny of the stakes that the nation’s largest asset managers have in banks to ensure that they are not exerting undue influence over the institutions. He also formerly served as Senior Counsel at the Federal Housing Finance Agency and a Senior Policy Advisor at the Treasury Department.
We will continue to monitor for developments.
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