As soon as Treasury Secretary Scott Bessent took the helm as Acting Director at the Consumer Financial Protection Bureau (CFPB), he ordered a “freeze” on all rulemaking and enforcement actions. Additionally, the CFPB requested an adjournment of a lawsuit challenging the bureau’s $8 credit card late fee rule, halting oral arguments that were scheduled to start. It is likely all investigative hearings are being postponed or canceled.
Next, we have questions about what other actions we can expect – such as voiding of any informal policy guidance, bulletins, circulars or interpretative rules from the past administration? Will he or others in the Republican party introduce resolutions under the Congressional Review Act to overturn any rules issued since mid-August, such as rules relating to overdraft fees, medical debt or financial data exchange? Will there be new proposals to amend or repeal existing rules, like the Dodd-Frank Act (DFA) 1071 Small Business Data Collection rule?
However, the most burning question inquiring minds want to know is, what about the CFPB itself? Will the CFPB ask itself – Why am I here? What is my purpose? Why do I exist? These existential questions go to the very core of whether the CFPB will continue to exist at all!
So, what would happen if the CFPB disappeared? As those that have been practicing Compliance for a number of years know, there was compliance before the CFPB! There were regulators, and exams, and enforcement actions. Just as the regulations were moved to the CFPB from the Federal Reserve Board (FRB) in 2010, they could just as well be moved back again.
Abolishing a Bank regulatory agency is also not new. For example, the Office of Thrift Supervision (OTS) was a federal agency that regulated and supervised financial institutions (like the failed Washington Mutual Bank) and like WAMU, disappeared in the aftermath of the 2008 financial crisis.
As always in regulatory compliance, “change” is a constant companion. Keep current on monitoring for regulatory activity, and stay the course. One thing you can be sure of – you can expect that at some point in the future, a regulator will be calling upon you to account for your compliance management program in 2025 and beyond.
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