Treasury Secretary Scott Bessent, who
Within an hour of Bessent being formally named to lead the agency, the CFPB's staff were instructed to halt nearly all work, according to a memo sent to staff obtained by American Banker. The memo stated that Bessent has been named acting director, effective Jan. 31, and that he "is committed to appropriately stewarding the agency pending new leadership."
Bessent — or his as-yet unnamed advisors — has dozens of important decisions to make regarding what comes next including whether the agency plans to defend past CFPB actions and rules in court.
The memo said that "in order to promote consistency with the goals of the administration," that all employees, contractors and other personnel cannot approve or issue any proposed or final rules or formal or informal guidance.
The memo followed with five other bullet points with instructions to staff "to suspend the effective dates of all final rules that have been issued or published but that have not yet become effective." Among them are the
Staff also was directed "not to commence, take additional investigative activities related to, or settle enforcement actions," and "not to issue public communications of any type, including publication of research papers."
The memo enacts a hiring freeze. Staff was told "not to approve or execute any material agreements, including related to employee matters or contractors."
Staff also were directed "not to make or approve filings or appearances by the Bureau in any litigation, other than to seek a pause in proceedings."
As a result, on Monday the CFPB had to ask for pauses in two different cases in litigation. The bureau asked for an adjournment of a lawsuit challenging the its small business data collection rule under section 1071 of the Dodd-Frank Act. Oral arguments had been scheduled to take place Monday in an appeal by the Chamber of Commerce.
CFPB lawyers also sought an adjournment on Monday in the the CFPB's appeal of a decision last year by the Fifth Circuit Court of Appeal to vacate changes to the bureau's exam manual that had added discrimination as an unfair practice.
Several employees, who spoke on condition that their names not be used to avoid retaliation, said the memo instructs the agency to stop nearly everything including any internal work on investigations. The memo was unsigned but came from the office of the director. It said that if employees had any questions, to "please raise issues through your existing management for consideration by the acting director."
Among the few areas of work that were not halted was supervision. The CFPB has primary supervisory authority over very large banks and certain nonbanks including mortgage companies, payday lenders, and some larger participants in other consumer financial markets. It is unclear if examinations will continue given that the memo only put a halt to investigations.
Sen. Elizabeth Warren, D-Massachusetts, who is the ranking member of the Senate Banking Committee, said in a statement that Bessent should reverse course.
"Secretary Bessent just sent a signal to giant corporations and big banks that it is open season to cheat, trick, and trap hard-working American families," Warren said. "Secretary Bessent must reverse course, and if he doesn't, I will use every tool at my disposal in the Banking Committee to hold him accountable — along with any company that lines its pockets at the expense of American taxpayers."
The memo was not a surprise to many banking experts given that President Donald Trump issued an executive order immediately after his inauguration telling all agency heads to stop all rulemakings. He sent a similar order in 2017, as did President Joe Biden in 2021, though at the time it was unclear if the order covered independent agencies like the CFPB.
Several of the CFPB's senior leaders remain in place, including General Counsel Seth Frotman, Supervision Director Lorelei Salas and Enforcement Director Eric Halperin. Frotman's term expires in October.
However, the CFPB's six political appointees, also known as Schedule C appointees, have departed, including Erie Meyer, chief technologist and senior advisor; Jan Singelmann, chief of staff; Angela Hanks, associate director of external affairs; Julie Morgan, associate director of the CFPB's Office of Research, Monitoring, and Regulations; and Allison Preiss, a senior communications advisor.
Rob Nichols, president and CEO of the American Bankers Association, said the trade group has long claimed that many of the actions taken by former CFPB Director Rohit Chopra exceed the bureau's statutory authority and "harmed our economy and imposed significant costs on American consumers."
"We urge Secretary Bessent to begin reversing the damage caused by these misguided regulatory actions and stand ready to support his efforts to chart a better course for the Bureau," Nichols said in a press release.
The Consumer Bankers Association had called on the new administration to extend the
(Separately, on Friday the House Financial Services Committee posted a draft resolution to overturn the CFPB's $5 overdraft fee
The Trump administration sent a
Trump also issued an executive order to strip civil service protections from federal employees and re-categorize thousands of civil servants as political appointees, enabling the administration to fire them.
