What You Need to Know About Trump’s Suspension of the CFPB

February 12, 2025 TruthUSA

The acting director of the consumer agency has halted its operations. Critics argue that consumer protection should revert to banking regulators and the FTC.

Last week, the Consumer Financial Protection Bureau (CFPB) was directed to cease all operations under the newly appointed Secretary of the Treasury, Scott Bessent.

At that time, Bessent, serving as the acting director of CFPB, implemented a freeze on all rule-making, enforcement investigations, and litigation against financial institutions, which are typically part of the CFPB’s responsibilities.

This measure parallels the recent pause of the U.S. Agency for International Development, which has been subjected to an investigation concerning its operational functionality.

According to the agency’s website, CFPB “implements and enforces federal consumer financial law and ensures that markets for consumer financial products are transparent, fair, and competitive.”

The CFPB is tasked with operating as an independent agency to “make consumer financial markets work for consumers, responsible providers, and the economy at large.”

For instance, the agency finalized a rule in January that prohibited medical bills from being included on credit reports, a change expected to benefit 15 million Americans.

The agency’s oversight extends to banks, credit unions, mortgage service providers, debt collectors, and even for-profit educational institutions, among various financial entities.

The CFPB is empowered to investigate these institutions and initiate legal actions. This includes the authority to issue subpoenas called civil investigative demands (CIDs) to uncover potential legal infractions. CIDs can compel the target to provide documents, emails, reports, responses to written queries, and oral testimony.

Changes Within the Agency

On February 3, CFPB announced Bessent’s appointment as the acting director, succeeding Rohit Chopra, whose exit was revealed shortly prior. The announcement indicated Bessent would step in as acting director beginning January 31.

Chopra emphasized in his resignation letter to President Donald Trump the critical role of the agency in consumer protection and addressing abusive practices, including junk fees.

“I hope that the CFPB will remain a cornerstone of restoring and advancing economic freedom in America, and I wish you success in serving our great nation,” wrote Chopra, who had been appointed by President Joe Biden.

Bessent’s tenure was brief; by February 8, White House Office of Management and Budget (OMB) chief Russ Vought was confirmed as the acting director of the CFPB.

Vought’s confirmation as budget chief occurred just two days earlier, on February 6. He played a significant role in the Project 2025 policy agenda, advocating for the elimination of the CFPB.

The agency was characterized as “highly politicized, harmful, and completely unaccountable.” The agenda posited that consumer protections should revert to banking regulators and the Federal Trade Commission, asserting that CFPB’s operations violated the Constitution.

Additionally, Elon Musk, a new Washington insider and head of the Department of Government Efficiency, expressed concerns about the agency, advocating for its deletion in a social media post in late November 2024, claiming, “There are too many duplicative regulatory agencies.”

Musk is believed to be influencing significant restructuring at USAID and hinted one day before Vought’s assumption of control that CFPB might be next on his target list.

“CFPB RIP,” Musk tweeted on February 7, noting in another post, “They did above zero good things, but still need to be eliminated.”

Other Departures

On February 11, two additional high-ranking officials announced their departure from CFPB, citing the White House’s decision to halt agency activities, based on internal emails reviewed by Reuters.

Enforcement Director Eric Halperin and Supervision Director Lorelei Salas communicated in their emails that their roles were no longer viable.

Conversely, the White House OMB contradicted that assertion, stating the two officials were placed on administrative leave.

In internal correspondence, Halperin expressed, “As you know we have been ordered to cease all work. I do not believe under these conditions I can effectively serve in my role, which is protecting American consumers. Today, I made the challenging decision to resign effective immediately.”

Salas conveyed a similar sentiment, expressing her belief that the halt was illegal, and thanking the team, stating that it had been her “honor to be part of this team—I appreciate you all and encourage you to remain resilient,” she wrote.

A spokesperson for OMB asserted in a statement that the agency had not received Salas’s resignation and that he was instead placed on administrative leave, citing insubordination on Halperin’s part.

Responses from Lawmakers

During the February 5 Senate Banking, Housing, and Urban Affairs Committee hearing, ranking member Elizabeth Warren (D-Mass.) advocated for lifting the freeze on the CFPB and criticized Trump administration officials.

“The freeze implemented by Secretary Bessent on the CFPB will result in more Americans across the nation being unfairly de-banked, and they will lose the only agency dedicated to assisting them,” Warren stated.

Since the CFPB’s establishment in 2011, Republicans have consistently criticized the agency over perceived lack of accountability and government overreach.

In 2019, House Republicans initiated a legal challenge against the CFPB’s constitutionality, arguing that its leadership structure breached the separation of powers doctrine.

In June 2020, the Supreme Court sided with the Republicans in its ruling. Although the agency was permitted to continue functioning, the ruling established that the president could dismiss the director at will.

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