“Stand Down” at CFPB
Client Alert | February 13, 2025
Activities at the Consumer Financial Protection Bureau are frozen amidst a leadership transition, while the agency’s future looks increasingly uncertain.
After a flurry of activity in December and January, the CFPB’s interim directors have halted staff’s work on rulemaking, investigations, enforcement, litigation, and supervision while the new administration evaluates its priorities for the agency. In this update, we recap the directives issued to agency staff over the past two weeks, assess the potential effects on the agency’s regulatory activity, and consider possible responses to any perceived enforcement or supervisory gaps from other regulators and enforcers.
New Directives
On January 31, President Trump removed Rohit Chopra as CFPB Director, kicking off two weeks of rapid change for agency staff. Treasury Secretary Scott Bessent was named the Acting Director on X,[1] who promptly ordered a halt to most agency activity. Specifically, CFPB staff were instructed that, unless expressly approved by the Acting Director, they were not to issue any proposed or final rules or guidance; commence, investigate, or settle enforcement actions; issue public communications; approve or enter material agreements; or make filings or appearances in litigation, other than to seek a stay.[2] Bessent also suspended the effective date of all final rules that had yet to take effect.[3]
The next week, on February 7, Russell Vought, the newly confirmed head of the Office of Management and Budget, succeeded Bessent as Acting Director.[4] Vought expanded the freeze to cover supervision and examination activities, closed the CFPB’s headquarters in Washington, D.C., and ordered all employees to work remotely and “stand down from performing any work task” without express approval.[5] Enforcement staff are restricted from communicating with current or prospective enforcement targets or their counsel without the express authorization of Mark Paoletta, general counsel at the Office of Management and Budget, who is anticipated to be serving as the new Chief Legal Officer at the CFPB.[6] Vought also cut the agency’s next funding request to the Federal Reserve, the source of the CFPB’s budget, to zero.[7] Vought’s orders came as staff with the Department of Government Efficiency (DOGE) were reported at the CFPB headquarters.[8]
On February 11, President Trump announced Jonathan McKernan, formerly a board member of the Federal Deposit Insurance Corporation, as his nominee for CFPB Director.[9] Industry players have hailed McKernan “as a sober, tried-and-tested pick[] in line with the mainstream financial regulators who staffed Trump’s first administration.”[10]
Potential Effects on Regulatory Activity
In the near term, regulated parties can expect radio silence from the CFPB. After Vought’s “stand-down” directive, few staff are working at all, some probationary employees have been laid off, and those staff who are working, with minimal exceptions, are not engaging in investigative, supervisory, or enforcement activities. Top supervision and enforcement officials have resigned, citing the Trump administration’s broad suspension of key financial industry oversight activities at the agency.[11] Litigation will be stayed, so long as courts accept the CFPB’s requests. And significant rules finalized in the waning days of Chopra’s directorship, such as the overdraft fee cap and the exclusion of medical debt from credit reports,[12] will remain on pause.
In the longer term, the agency’s future is uncertain. President Trump recently defended the stop-work order and confirmed his intention to “get rid of” the CFPB, which he called “a woke and weaponized agency against disfavored industries and individuals.”[13] Elon Musk, who is leading DOGE, has posted “Delete CFPB” and “CFPB RIP” on X.[14] And Republicans in the House and Senate have introduced legislation to defund the CFPB by cutting its statutory funding cap to zero.[15] However, Democrats, like Elizabeth Warren, have pledged to defend the CFPB.[16]
Courts might step in to limit an administrative shutdown of the agency. The National Treasury Employees Union, which represents unionized CFPB employees, has sued to block Vought’s “stand-down” directive, arguing that separation-of-powers principles prevent the administration from winding down a congressionally authorized agency.[17]
At a minimum, regulated parties can expect the new administration will critically examine each active initiative—likely withdrawing some rules, settling some litigation, and dropping some enforcement actions. For example, the CFPB recently told a federal court that it “could take action to withdraw or modify” the agency’s supervision order over Google Pay.[18] More rollbacks are very likely to follow.
Other Enforcers
If the CFPB substantially curtails its activities, other regulators could step up their regulatory activity in the same space.
The Federal Trade Commission in particular has concurrent enforcement authority over some statutes, such as the Fair Credit Reporting Act, 15 U.S.C. § 1681, and can police “unfair practices” under the FTC Act, 15 U.S.C. § 45. Since the FTC has insight into the CFPB’s investigations and enforcement under the agencies’ memorandum of understanding,[19] it could pick up some of the CFPB’s initiatives.
State Attorneys General also have broad authority to enforce state consumer protection laws[20] and, under 12 U.S.C. § 5552, may enforce the (federal) Consumer Financial Protection Act against defendants in their respective jurisdictions. State Attorneys General in some states are expected to become more active if federal enforcement wanes. In fact, prior to the leadership transition, the CFPB published a report with a compendium of guidance aimed at states that contained specific recommendations and could serve as the blueprint moving forward.[21] Further, state banking departments have independent supervisory authority over many of the non-bank financial institutions that have been historically subject to additional supervision by the CFPB. These state banking departments may enhance supervisory oversight over non-bank financial institutions in light of any perceived supervisory gap at the federal level.
[1] CFPB, Statement on Designation of Treasury Secretary Scott Bessent as Acting Director of the Consumer Financial Protection Bureau (Feb. 3, 2025), https://www.consumerfinance.gov/about-us/newsroom/statement-on-designation-of-treasury-secretary-scott-bessent-as-acting-director-of-the-consumer-financial-protection-bureau.
[2] Jon Hill, “Treasury’s Bessent Takes CFPB Reins, Halts Agency Actions,” Law360 (Feb. 3, 2025), https://www.law360.com/consumerprotection/articles/2292253.
[3] Id.
[4] Jon Hill & Courtney Bublé, “‘Stand Down’: CFPB’s Acting Chief Pulls Employees Off Job,” Law360 (Feb. 10, 2025), https://www.law360.com/consumerprotection/articles/2295798.
[5] Id.
[6] Id.
[7] Id.
[8] Evan Weinberger, “Musk’s DOGE Descends on CFPB With Eyes on Shutting It Down,” Bloomberg Law (Feb. 7, 2025), https://news.bloomberglaw.com/banking-law/musks-doge-descends-on-consumer-financial-protection-bureau.
[9] Michael Stratford, Declan Harty, & Katy O’Donnell, “Trump steps up overhaul of bank oversight with key picks,” Politico (Feb. 11, 2025), https://www.politico.com/news/2025/02/11/trump-bank-wall-street-regulators-top-posts-00203745.
[10] Jon Hill, “Trump’s Picks For CFPB, OCC Chiefs Hailed By Industry,” Law360 (Feb. 12, 2025), https://www.law360.com/corporate/articles/2297154/trump-s-picks-for-cfpb-occ-chiefs-hailed-by-industry-.
[11] Jon Hill, “CFPB’s Top Supervisor, Enforcer Call It Quits Amid Closure,” Law360 (Feb. 11, 2025), https://www.law360.com/corporate/articles/2296518/cfpb-s-top-supervisor-enforcer-call-it-quits-amid-closure.
[12] See CFPB, Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V) (Jan. 7, 2025), https://www.consumerfinance.gov/rules-policy/final-rules/prohibition-on-creditors-and-consumer-reporting-agencies-concerning-medical-information-regulation-v; CFPB, Overdraft Lending: Very Large Financial Institutions Final Rule (Dec. 12, 2024), https://www.consumerfinance.gov/rules-policy/final-rules/overdraft-lending-very-large-financial-institutions-final-rule.
[13] “Trump confirms goal to shutter CFPB,” ABA Banking Journal (Feb. 11, 2025), https://bankingjournal.aba.com/2025/02/trump-confirms-goal-to-shutter-cfpb.
[14] Weinberger, supra.
[15] Press Release, “Congressman Keith Self Introduces Bill to Eliminate CFPB Funding” (Jan. 30, 2025), https://keithself.house.gov/media/press-releases/congressman-keith-self-introduces-bill-eliminate-cfpb-funding; Press Release, “Sen. Cruz Introduces Legislation to Defund the CFPB and Restore Congressional Oversight” (Jan. 29, 2025), https://www.cruz.senate.gov/newsroom/press-releases/sen-cruz-introduces-legislation-to-defund-the-cfpb-and-restore-congressional-oversight.
[16] Claire Williams, “Warren, Democrats promise to fight for CFPB at rally,” American Banker (Feb. 10, 2025), https://www.americanbanker.com/news/warren-democrats-promise-to-fight-for-cfpb-at-rally.
[17] National Treasury Employees Union v. Vought, No. 1:25-cv-00381 (D.D.C.).
[18] Jon Hill, “CFPB Will Mull Axing Google Payment Oversight Order,” Law360 (Feb. 7, 2025), https://www.law360.com/technology/articles/2294631.
[19] Memorandum of Understanding Between the Consumer Financial Protection Bureau and the Federal Trade Commission (Feb. 25, 2019), https://files.consumerfinance.gov/f/documents/cfpb_ftc_memo-of-understanding_2019-02.pdf.
[20] See Consumer Protection Laws: 50-State Survey, Justia, https://www.justia.com/consumer/consumer-protection-laws-50-state-survey; National Association of Attorneys General, Consumer Protection 101, https://www.naag.org/issues/consumer-protection/consumer-protection-101.
[21] Jon Hill, “CFPB Serves Up Consumer Protection Roadmap For States,” Law360 (Jan. 15, 2025), https://www.law360.com/articles/2284260/cfpb-serves-up-consumer-protection-roadmap-for-states.
Gibson Dunn lawyers are closely monitoring developments at the CFPB and are available to discuss these issues as applied to your particular business. If you have questions about CFPB regulation and how best to prepare, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Consumer Protection or Fintech and Digital Assets practice groups, or the following:
Consumer Protection:
Gustav W. Eyler – Washington, D.C. (+1 202.955.8610, geyler@gibsondunn.com)
Natalie J. Hausknecht – Denver (+1 303.298.5783, nhausknecht@gibsondunn.com)
Ashley Rogers – Dallas (+1 214.698.3316, arogers@gibsondunn.com)
Fintech and Digital Assets:
M. Kendall Day – Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)
Jeffrey L. Steiner – Washington, D.C. (+1 202.887.3632, jsteiner@gibsondunn.com)
Sara K. Weed – Washington, D.C. (+1 202.955.8507, sweed@gibsondunn.com)
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