WASHINGTON — The Consumer Financial Protection Bureau, the so-called cop on the beat protecting Americans from financial abuse, is now under strict orders to do nothing.
“Please do not perform any work tasks,” Russell Vought, the acting director, wrote on Monday to CFPB staff in an email obtained by CNN that announced the headquarters would be closed this week.
That is on top of an expanded freeze on activities that he ordered Saturday night instructing staff to stop a host of efforts, including “all supervision and examination activity.”
Vought’s order comes a week after the prior acting director, Treasury Secretary Scott Bessent, had ordered a somewhat narrower freeze.
The freeze means the bureau — which was created by Congress under the 2010 Dodd-Frank Act to protect consumers from financial abuses and to regulate providers of various financial services and products — cannot engage in hiring, rulemaking, active lawsuits, enforcement actions or investigations. The agency is also suspending the effective dates of recently finalized new consumer protections. And it also will “cease all shareholder engagement.”
The wide-ranging freeze — particularly in enforcement and supervision — worries consumer advocates because it leaves Americans even more vulnerable to financial predators.
Democratic Sen. Elizabeth Warren at a Senate Banking Committee hearing Tuesday put it bluntly: “There are now zero cops overseeing the $18 trillion consumer lending market. Zero cops. Investigations into illegal foreclosures and auto repossessions – canceled. Exams of giant credit card issuers to weed out unlawful junk fees – canceled. Probes of illegal debt collection practices – canceled. Rules to save people billions of dollars – canceled.”
There is no indication how long the freeze will last. “As long as CFPB’s work is halted, bad actors go unpunished. It doesn’t mean risks stop occurring just because the bureau decided to take its foot off the gas,” said Adam Rust, director of financial services at the Consumer Federation of America.
What protections may be at risk
It’s impossible to predict with certainty what will happen to various consumer protections and enforcement actions going forward. But agency watchers think the new leadership at CFPB may table or slow-walk some rules and enforcement efforts, including some that were part of the Biden administration’s effort to crack down on “junk” fees.
Here is just a sampling of what may be at risk:
Banning medical debt on credit reports: Take the recently finalized rule banning the inclusion of consumers’ medical debt on their credit reports and banning lenders from using certain medical information to make loan decisions. The rule was set to take effect on March 17, according to the Federal Register.
“Medical debt rulemaking is on the chopping block,” said Meredith Osborn, a partner at the law firm Arnold & Porter who served as an attorney in enforcement during the CFPB’s earliest days.
House Financial Services Committee Chairman French Hill has already signaled his opposition.
And in mid-January, industry groups for credit bureaus and debt collectors sued to stop the rule.
Capping credit card late fees: The CFPB under previous head Rohit Chopra finalized a rule in March of last year that capped most credit card late fees at $8, down from an average of $32. The CFPB estimated the rule would save families roughly $10 billion a year, or $220 each on average annually for the 45 million people subject to such fees.
But the cap was blocked from taking effect by a federal judge in Texas, who issued a preliminary injunction until the lawsuit contesting the rule, which was brought by banking and business groups, is resolved.
Both Osborn and Jaret Seiberg, financial services policy analyst at TD Cowen Washington Research Group, think the $8 cap is now vulnerable, as the agency may decide to drop its defense of it in court.
But this rule and others highlight the tension between the Trump administration’s desire for greater deregulation and Trump’s populist rhetoric, said Aaron Klein, a senior fellow in economic studies at the Brookings Institution. For example, the president has expressed support for a 10% interest rate cap on credit cards. “Does Trump want to live in a world with a 10% rate cap and $35 fees for everything?” he said.
Capping bank overdraft fees: In December, the CFPB finalized a rule capping most bank overdraft fees at $5, down from the typical $35. It is not set to take effect until October.
The CFPB had estimated the rule would save Americans up to $5 billion a year, or $225 annually on average for families that have incurred overdraft fees.
Banking and credit union associations have sued the agency over the rule, alleging it has exceeded its regulatory authority and that the rule will “harm the consumers who most benefit from the access to liquidity enabled by overdraft services.”
As with the credit card cap, Seiberg predicts the new management at CFPB may decide not to defend it in court.
Making it easier to switch banks: In October, the CFPB finalized a so-called “open banking” rule, which aims to make it easier, more secure and always free for customers to switch accounts or to simply transfer or share their financial data from their banks, credit card issuers and other financial service providers upon request.
And it limits third parties’ use of consumers’ personal finance data to only those purposes requested by the consumer.
The rule would create more of a competitive playing field between traditional banks and non-bank financial technology companies, or fintechs. “It benefits non-bank institutions, by taking customers away from big banks,” Osborn said.
Banking associations immediately filed a lawsuit against the agency, alleging the rule puts consumer privacy and account security at risk.
Because the rule’s effective date isn’t until 2026, “CFPB could reverse it. But it benefits fintech, which has supported Trump. (This is) one where there may be less of an immediate push to jettison it,” Osborn said.
Suing banks for Zelle fraud: In late December, the CFPB sued JPMorgan Chase, Bank of America and Wells Fargo for not doing enough to prevent fraudulent transactions on Zelle, the most widely available peer-to-peer payment system.
The CFPB alleged that hundreds of thousands of customers at the three banks, which co-own Zelle with four other banks, have lost more than $870 million over the past seven years, an estimate Zelle disputes.
Given the freeze at the agency on enforcement and lawsuits, Osborn doesn’t expect resolution of the issue anytime soon.
Will the agency even survive?
What the bureau might look like after the freeze is lifted is anyone’s guess.
But given events in the past several days, CFPB employees and others worry that the Trump administration is trying to severely gut the agency’s ability to do its work. One federal employee told CNN they think the agency’s ability to deliver real benefits to working class Americans won’t be continued under the Trump administration.
Trump on Monday confirmed that his goal is to “totally eliminate” the CFPB. Elon Musk has effectively called for its death – posting “CFPB RIP” on his social media platform X on Friday. And members of Musk’s team at the “Department of Government Efficiency,” which has created chaos across the federal government, were granted administrative access to CFPB’s systems last week.
What’s more, when Vought was asked by CNN on Tuesday whether it’s legal to dismantle agencies like USAID and CFPB, he replied, “Everything we do is legal.” He would not, however, answer when asked whether the administration would abide by Supreme Court decisions should such issues come before it.
All that said, the CFPB was created by Congress. And, Osborn noted, “until Congress passes a law rescinding in part or in whole the Dodd-Frank Act, there will be a CFPB. How energetic and impactful it will be is an open question.”
Warren, who originated the idea for CFPB before she became a lawmaker, made it clear in a post on X Saturday night that the agency has prevailed despite significant of Republican opposition over the years. “The Consumer Financial Protection Bureau has returned over $21 billion to families cheated by Wall Street. Republicans have failed to gut it in Congress and in the courts. They will fail again.”
Either way, the speed and severity with which the administration is trying to shutter the agency may come at a cost to everyone, according to Thomas Kingsley, director of financial services policy at the center-right think tank American Action Forum. “Over the past two decades, the CFPB has supplanted a significant body of existing consumer protections at other federal regulators. Halting operations at the CFPB without a plan for replacing these protections is not without risks to both consumers and the administration,” Kingsley wrote in an analysis.
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