Scott Bessent has taken the helm as the acting director of the Consumer Financial Protection Bureau (CFPB), following the abrupt dismissal of Rohit Chopra by President Donald Trump. Bessent's appointment marks a significant turning point for the agency established to protect consumers from unfair financial practices, leading to immediate changes within its operations.
Within hours of being named acting director, Bessent ordered the CFPB to halt nearly all activities. According to internal communications obtained by Bloomberg Law and American Banker, employees were instructed to suspend rulemaking, litigation, and any public communications until he or new leadership could review active initiatives. This move highlights the stark shift from Chopra's proactive approach, which included imposing regulations on banks and financial institutions aimed at protecting consumers.
“Effective immediately, all employees, contractors, and other personnel of the Bureau are directed not to approve or issue any proposed or final rules or guidance,” Bessent's memo stated. He emphasized the need to align the agency's activities with the current administration's goals.
Under Chopra's leadership since 2021, the CFPB aggressively tackled issues ranging from limiting overdraft fees to ensuring medical debt would not impact consumer credit reports. These actions had drawn sharp criticism from banking industry advocates, who now find Bessent's appointment more favorable. “We urge Secretary Bessent to begin reversing the damage caused by these misguided regulatory actions,” Rob Nichols, president of the American Bankers Association, said. The shift is being celebrated by some within the industry who viewed Chopra's tenure as overly invasive.
Bessent, who was previously confirmed as Treasury Secretary just days prior, signaled his intention to work closely within the framework of President Trump's economic policies. “I look forward to working with the CFPB to advance President Trump’s agenda to lower costs for the American people and accelerate economic growth,” he stated.
The changes initiated by Bessent have raised concerns among consumer advocacy groups, who fear this could signal the erosion of protections gained during Chopra's tenure. Tony Carrk of Accountable.US expressed these fears: “While the Trump administration parades corporate lobbyists, we're faced with the end of basic protections for American consumers.”
Specifically affected by Bessent’s directives are the CFPB's examinations and enforcement investigations, effectively putting them on hold. The memo instructed staff to cease enforcement actions and public communications, stating they were only permitted to seek continuances on existing litigations. “It seems like we’re shutting things down completely,” remarked one staff member who preferred to remain anonymous.
Bessent’s email called for suspending the effective dates of rules not yet enacted, such as limitations on how medical debt is reported. The halting of this legislation drew immediate scrutiny, particularly from those who advocate for consumer protection. Bessent’s actions appear to reflect Trump’s disdain for the bureau itself; the former President and current advisors, including tech mogul Elon Musk, have previously called for eliminating the CFPB altogether.
Legal experts already anticipated this freeze on existing rules and regulations. The earlier executive orders by Trump and Biden directing agency heads to stop all rulemakings have perpetuated this pattern of regulation suspension whenever there’s a change in administration.
Bessent's next steps include determining whether to uphold previous CFPB actions challenged legally, as several cases are currently underway. These include disputes over existing small business demographic data rules and legal challenges against regulations enforcing ethical standards on financial institutions.
Despite the uncertainty surrounding the CFPB’s immediate future, Bessent’s management will be closely watched. While he has temporarily halted numerous initiatives, how he chooses to proceed with litigation and rulemaking will significantly shape the agency’s direction. Bessent, along with his yet-to-be-named advisors, has the task of deciding which remnants of the Chopra era will be preserved or discarded.
Supporters of Bessent's approach argue it aims toward fostering economic growth and easing the regulatory burdens on businesses. Still, it’s evident the balance of power within the CFPB will continue to evolve, potentially leaving many consumers vulnerable as the agency reorients itself under new leadership.
The CFPB has long served as a watchdog agency, created by the Dodd-Frank Act post-2008 financial crisis to safeguard consumers. The current stance taken by Bessent could unravel years of progress aimed at consumer protection. Observers from both sides of the regulatory fence are left pondering the long-term consequences of this leadership shift and the rulemaking halt it entails.
With Bessent now at the helm, the question remains: to what extent will consumer protections be reinstated, altered, or entirely dismantled as the CFPB begins this new chapter?