WASHINGTON — The Trump administration has instructed the Consumer Financial Protection Bureau (CFPB) to halt most of its operations, marking an effective shutdown of the agency that was established in response to the 2008 financial crisis and the subsequent subprime mortgage-lending scandal.
Russell Vought, appointed as the new director of the Office of Management and Budget, outlined the new directive in an email sent late Saturday, which has been confirmed by multiple sources. This instruction mandates the CFPB to cease work on proposed regulations, suspend the implementation of already finalized rules, and halt any investigative activities or new cases. Since its inception, the CFPB has faced criticism from conservative circles, particularly due to its establishment following President Obama’s push for financial reform in 2010.
The email also directed the bureau to stop all supervisory and examination activities. Furthermore, it was announced that the CFPB’s Washington, D.C. headquarters would be closed for the week of February 10 to February 14, although no specific reason for the closure was provided. Employees and contractors received instructions to work remotely unless they were otherwise directed.
This directive resembles previous moves made by the administration to dismantle the U.S. Agency for International Development. Given that the CFPB was created by Congress, it would take another congressional act to eliminate it entirely. However, the agency’s head holds considerable authority in determining enforcement actions.
On social media platform X, Elon Musk remarked, “CFPB RIP” as discussions surrounding the bureau escalated. Notably, the CFPB’s website appeared to be unavailable, displaying a “page not found” message as of Sunday. In a social media update, Vought mentioned that the CFPB would refrain from accessing its forthcoming funding from the Federal Reserve, describing its current reserve of $711.6 million as “excessive.” This funding structure was originally established to shield the bureau from political influence.
Vought stated that “this spigot, long contributing to CFPB’s unaccountability, is now being turned off.” Since its formation, the CFPB claims to have secured nearly $20 billion in relief for American consumers, comprising canceled debts, compensatory payments, and loan reductions. Recently, the bureau initiated legal action against Capital One, accusing the institution of misleading customers regarding high-interest savings accounts and allegedly depriving them of over $2 billion in interest payments.
Dennis Kelleher, president of Better Markets, an advocacy group, commented on the administration’s stance, indicating that Wall Street’s biggest banks and Trump’s wealthy allies oppose the CFPB due to its robust enforcement efforts in protecting consumers from financial exploitation.
The situation highlights the tension between President Trump’s populist promises to manage costs for working-class families and his commitment to reducing government oversight. During his campaign, Trump proposed capping credit card interest rates at 10% after seeing rates climb above 20% amid Federal Reserve rate increases in 2022 and 2023. The CFPB had begun to explore how this proposal could be realized.
Although the CFPB can still accept complaints, its capacity to conduct examinations or follow through on existing investigations is now limited, as relayed by a source familiar with the bureau who preferred to remain anonymous. The directive is also seen as a means to restrict the CFPB’s communication with regulated entities, consumer advocates, and other external organizations.
Musk’s company would have potential access to various data concerning complaints and regulatory oversight, which raises concerns, especially as Musk’s firm could be developing a payments system that competes with other providers like Cash App.
Vought’s email adds to a recent trend in the Trump administration’s rapid curtailment of federal agency activities deemed excessive. The CFPB was a product of Obama’s initiatives following the financial collapse linked to fraudulent lending practices and was inspired by Massachusetts Senator Elizabeth Warren, leading to numerous legal challenges from major banking institutions and financial associations.
Warren criticized Vought’s directives, stating that he is giving an advantage to large banks and corporations to exploit families. Recently, she urged Trump to collaborate with the CFPB to combat the issue of “de-banking,” where banks close consumer accounts due to perceived financial or reputational risks.
Warren emphasized that the CFPB plays a crucial role in protecting Americans against unfair banking practices during a Senate Banking Committee session. The recent communications revealed that Vought was appointed acting director of the CFPB on Friday, following the dismissal of the previous director, Rohit Chopra, on February 1. Vought, who has influenced policy initiatives in the past, now faces significant challenges as he advances the administration’s agenda.
Under Chopra’s leadership, the CFPB advocated for regulatory measures such as capping overdraft fees and proposing restrictions on data brokers selling personal information, including Social Security numbers. The evolving circumstance surrounding the CFPB indicates a notable shift in the administration’s approach to consumer protection and financial regulation.
