What to Know About Trump’s Halt to the CFPB

The acting director of the consumer agency put a freeze its activities. Critics say consumer protection should return to banking regulators and the FTC.

The Consumer Financial Protection Bureau in Washington on Oct. 31, 2023. Madalina Vasiliu/The Epoch Times

The Consumer Financial Protection Bureau (CFPB) was ordered to stop all activities last week under newly minted Secretary of the Treasury Scott Bessent.

Bessent, who was at the time the acting director of CFPB, put a freeze on all rule-making, enforcement investigations, and litigation against financial institutions, which is part of CFPB’s normal function.

This action is similar to what took place just days before when the U.S. Agency for International Development was paused for an investigation into how the agency was functioning.

According to the agency’s website, CFPB “implements and enforces federal consumer financial law and ensures that markets for consumer financial products are transparent, fair, and competitive.”

It’s the job of the CFPB to work as an agency independent of the government to “make consumer financial markets work for consumers, responsible providers, and the economy as a whole.”

For example, the agency in January finalized a rule that banned the inclusion of medical bills on credit reports, a change that it said would benefit 15 million Americans.

Jurisdiction for the agency includes banks, credit unions, mortgage services, debt collectors, even for-profit colleges, among other financial institutions.

The agency is authorized to investigate institutions and initiate legal proceedings. Included in that is the ability to issue subpoenas known as civil investigative demands (CIDs) to root out potential legal violations. The CIDs can require that a target submit documents, emails, reports, answers to written questions, and oral testimony.

Agency Changes

CFPB announced on Feb. 3 that Bessent would serve as the acting director in place of Rohit Chopra, whose departure was made public just days before. The announcement indicated that Bessent’s appointment was valid beginning on Jan. 31.

Chopra wrote in his resignation letter to President Donald Trump on the importance of the agency’s job of protecting consumers and cracking down on abuse and junk fees, among other issues.

“I hope that the CFPB will continue to be a pillar of restoring and advancing economic liberty in America, and I wish you good luck in serving our great country,” wrote Chopra, who was appointed by President Joe Biden.

The Treasury secretary’s tenure didn’t last long, however. Just days later, on Feb. 8, it was confirmed that White House Office of Management and Budget (OMB) chief Russ Vought was appointed as the acting director of the CFPB.

Vought was confirmed as the White House budget chief two days prior, on Feb. 6. Vought was one of the minds behind the Project 2025 policy agenda in which the authors called for the abolishment of CFBP.

The agency was described as “highly politicized, damaging, and utterly unaccountable.” The plan also asserted that CFPB’s operation was in violation of the Constitution, saying that consumer protections should return to banking regulators and the Federal Trade Commission.

New Washington insider and Department of Government Efficiency head Elon Musk has also voiced concern about the agency, saying, “Delete CFPB,” in a post on social media platform X in late November 2024. “There are too many duplicative regulatory agencies.”

Musk is believed to be the driving force behind the massive changes at USAID in recent days, and indicated the day before Vought’s takeover that CFPB might be next on his list of agencies to target.

“CFPB RIP,” Musk wrote on Feb. 7, saying in another post, “They did above zero good things, but still need to go.” 

Other Departures

Two more top officials announced their departure from CFPB on Feb. 11, citing the White House decision to pause agency activity, according to internal emails reviewed by Reuters.

Enforcement Director Eric Halperin and Supervision Director Lorelei Salas said in the emails that their positions were no longer tenable.

However, the White House OMB contradicted that report, saying the pair were put on administrative leave.

Halperin wrote in the internal correspondence, “As you know we have been ordered to cease all work. I don’t believe in these conditions I can effectively serve in my role, which is protecting American consumers. Today I made the difficult decision to resign effective today.”

A similar statement was made by Salas, who said she believed that the halt was illegal but that it had been her “honor to be part of this team—I thank you and ask that you stay strong,” she wrote.

A spokesperson for OMB said in a statement that the agency did not receive Salas’s resignation and that he was instead put on administrative leave. The spokesperson also cited insubordination on the part of Halperin.

Lawmakers’ Responses

During a Feb. 5 Senate Banking, Housing, and Urban Affairs Committee hearing, ranking member Elizabeth Warren (D-Mass.) argued in favor of lifting the freeze on the CFPB and called out Trump administration officials.

“The freeze Secretary Bessent has put on the CFPB means more Americans across the country will be unfairly de-banked, and they will lose the one agency working to help them,” Warren said.

Since the CFPB was created in 2011, Republicans have consistently criticized the agency for what some have considered lack of accountability and governmental overreach.

House Republicans brought a legal challenge to CFPB’s constitutionality in 2019, arguing that the agency’s leadership structure violated the separation of powers.

The Supreme Court agreed with the Republicans in a June 2020 ruling. While the agency was allowed to continue to operate, the ruling made it possible for the president to remove the director at will.