Treasury Secretary Halts All CFPB Activity
Treasury Secretary Scott Bessent has shut down a wide variety of operations inside the Consumer Financial Protection Bureau in his new role as acting director.
Bessent ordered the CFPB to stop all rulemaking, communications, litigation, and other activities, according to a Monday email to staff obtained by Bloomberg Law.
Bessent took over the CFPB as acting director after President Donald Trump fired Biden-era Director Rohit Chopra.
“As Acting Director, Secretary Bessent is committed to appropriately stewarding the agency pending new leadership,” the email said.
Essentially all activities at the bureau are on hold to “promote consistency with the goals of the Administration,” the email said. Only activities authorized by Bessent or required by law can move forward, it said.
A source inside the bureau who asked to remain anonymous said the order appeared to shut down the CFPB altogether, for the time being.
It comes as Elon Musk’s Department of Government Efficiency has moved to shutter the US Agency for International Development despite the funding being mandated by Congress. Musk has also called to “Delete CFPB” on his X social media platform.
Rules, Guidance
Bessent’s email called on the CFPB to “suspend the effective dates” for all final rules that haven’t taken effect. Among the rules affected are the agency’s ban on including medical debt on consumer credit reports, which was set to take effect March 17, and a $5 cap on overdraft fees.
The email also ordered the CFPB “not to approve or issue” any proposed or final rules or formal and informal guidance.
All pending litigation was paused as well, with attorneys instructed they were only empowered to seek continuances of existing cases.
The CFPB was set to appear in two cases before the US Court of Appeals for the Fifth Circuit on Monday.
In one, originally scheduled for 9 a.m. New Orleans time, the CFPB was set to defend a March 2021 update to its examination manual that would’ve determined that discrimination was an unfair act or practice.
“As a result for the change in leadership just this morning, I was told that we’re just allowed to ask for continuance to allow the new leadership to review the litigation,” CFPB attorney Justin Sandberg told the three-judge panel on Monday.
In the second case, the American Bankers Association and other banking trade groups were attempting to overturn a Texas federal judge’s decision allowing the CFPB’s small business demographic data rule to move forward.
Enforcement, Communications
Bessent said the CFPB couldn’t open any new enforcement investigations or continue existing ones.
The order also said the CFPB couldn’t enter into enforcement settlements.
The CFPB was ordered to cease all public communications, including the publication of research papers, and to stop any “material agreements, including related to employee matters or contractors.”
The CFPB didn’t immediately respond to requests for comment.
The CFPB also has the power to directly supervise the companies it regulates. Bessent’s all-staff email didn’t mention any restrictions on supervision.
The CFPB’s legal department is reviewing the memo to determine its full impact, multiple sources said.