The Trump administration has taken decisive action against the Consumer Financial Protection Bureau (CFPB) by directing it to halt nearly all operations, effectively ceasing an agency that was established to safeguard consumers following the 2008 financial crisis and the subprime mortgage scandal. The move was announced by Russell Vought, who recently assumed the role of director of the Office of Management and Budget (OMB). In an email sent on Saturday night, Vought instructed the CFPB to stop working on proposed regulations, suspend the implementation of any finalized rules that had not yet taken effect, and terminate ongoing investigative efforts while refraining from initiating any new investigations.
The CFPB was created under President Barack Obama's administration as part of the 2010 financial reform legislation, and it has long been a focal point for conservative criticism. Vought's email also mandated the bureau to cease all supervisory and examination activities. Furthermore, in a subsequent social media post, he stated that the CFPB would no longer withdraw funds from the Federal Reserve, contending that the bureau's current budget of $711.6 million is "excessive." The funding structure was designed by Congress to shield the CFPB from political influence.
Since its inception, the CFPB has secured nearly $20 billion in consumer financial relief, which includes canceled debts, compensation, and reduced loan amounts. Dennis Kelleher, president of the advocacy group Better Markets, commented that Wall Street's major banks and Trump's affluent allies oppose the bureau because it effectively serves as a protector of consumers against financial predators and scams, benefitting both Republicans and Democrats alike.
This administrative action underscores the conflicting dynamics between Trump's populist promises aimed at reducing costs for working-class families and his commitment to diminishing government regulation. During his campaign, Trump advocated for capping credit card interest rates at 10%, in response to the significant spike in average rates exceeding 20% as a result of the Federal Reserve's rate hikes in 2022 and 2023. The CFPB had also commenced efforts to explore how such a proposal could be implemented.
Vought's directive follows a prior order from Treasury Secretary Scott Bessent on February 3 and reflects the Trump administration's ongoing initiative to curtail the activities of federal agencies deemed excessive. In his social media post, Vought criticized the CFPB, labeling it as "unaccountable."
The CFPB was established in response to the 2007-2008 housing market collapse and financial crisis, which was partly attributable to fraudulent mortgage lending practices. The agency was conceived by Senator Elizabeth Warren of Massachusetts and has faced opposition and legal challenges from larger banks and financial industry trade groups. In his email, Vought revealed that President Trump appointed him as the acting director of the CFPB on Friday, following the termination of the previous director, Rohit Chopra, on February 1.
Under Chopra's leadership, the CFPB had made significant advancements, such as approving regulations to limit overdraft fees, curtail junk fees, and proposing measures to restrict data brokers from selling sensitive personal information, including Social Security numbers. The agency also aimed to address concerns related to allegations of "debanking" affecting cryptocurrency companies and sought to prohibit contracts that might restrict someone's access to financial services based on political expressions.
