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The US Consumer Financial Protection Bureau (CFPB) is facing an existential crisis following an immediate suspension order issued by its new acting director.
On Friday last week (January 31), President Trump relieved Rohit Chopra from his post as CFPB director, replacing him with Treasury secretary Scott Bessent, who was designated on Monday (February 3).
Bessent’s first action as head of the agency was to send an email to all staff halting all current activities, including rule-making, investigations and enforcement actions.
During the presidential election campaign, Trump and key allies such as Elon Musk were critical of the CFPB, with Musk suggesting that the agency ought to be abolished.
However, Trump did not issue any formal commitment to scrapping the agency, or to downsizing its headcount or remit.
Moreover, when Bessent took over at the CFPB, he initially said that he would “look forward to working with the CFPB to advance President Trump’s agenda to lower costs for the American people and accelerate economic growth”.
One hour later, however, he effectively put the agency in lockdown, with its staff and current engagements now facing an uncertain future.
Reaction among Trump critics
Critics of the Trump White House immediately condemned the move, describing it as a win for financial institutions seeking lighter-touch regulation and enforcement.
Robert Reich, former secretary of labour under President Clinton, highlighted the work that will be put on hold while the CFPB is out of action.
“This includes capping credit card rates and excessive fees; penalising banks for ripping off consumers; and preventing politically-motivated debanking,” he said.
“It's a victory for Wall Street at your expense.”
Although it is currently unclear whether the suspension is part of a larger plan to abolish the agency, several US lawmakers have promised that they will fight to prevent this.
Senator Elizabeth Warren (D-MA), for example, said last week that if President Trump is serious about lowering costs and capping credit card interest rates, as promised during his campaign, he will need a strong CFPB and a strong CFPB director.
Warren also noted that, since its creation in 2011, the CFPB has helped to return more than $20bn to consumers who were ill-treated by financial institutions in areas such as junk fees, medical debt and predatory lending.
“That little agency holds Wall Street accountable for cheating and tricking and trapping hard-working families all across this country,” she said.
“So let me be clear, if President Trump and the Republicans decide they’re going to bend a knee to Wall Street billionaires and try to destroy that agency, they’re going to have a fight on their hands.”
