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Outgoing CFPB’s Lame Duck Rulemakings Reiterate Need for Reform at Increasingly Political Bureau

Weston Loyd
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What’s Happening

Following the 2024 election, lawmakers called on the Biden Administration’s regulators to cease promulgating rules and regulations. While all of the other banking regulators have heeded this call, the Consumer Financial Protection Bureau (CFPB) disregarded these requests and kicked its politically-driven rulemakings and actions into overdrive in the lame duck period of the Administration. 

What They Are Saying

As Senate Banking Committee Chair Tim Scott (R-S.C.) said:

“On November 6th, Americans across the country rejected your administration’s radical economic agenda and delivered President Trump and the incoming Republican Congress a clear mandate to usher in a new era of government. Given this mandate, it is incumbent upon you and your administration to ensure that President Trump can implement the agenda the American people voted for by allowing him to take office on January 20th with a fresh slate. As the top Republican on the Senate Committee on Banking, Housing, and Urban Affairs, I call on the agencies overseen by the Committee to cease all rulemaking, including the finalization of any pending or proposed regulations or guidance, and to comply with federal record retention laws and preserve all agency documents, records, and communications.”

As House Financial Services Committee Chair French Hill (R-Ark.) said:

“In light of the historic win […] by President-elect Donald J. Trump, I call on you to immediately cease all ongoing rulemaking actions and suspend the proposal or promulgation of any regulations. Americans have expressed their widespread discontent over the outgoing administration's excessive regulatory overreach throughout the past four years. This relentless rulemaking agenda has stifled economic growth and innovation, and restricted consumer access to financial products. As a matter of transparency and public accountability, each of your agencies should abandon any action or plan to force through a politicized regulatory agenda, which voters have already rejected. It is in the interest of all Americans that this agenda be halted immediately in order to restore the balance between the government and the people it serves.”

Why It Matters 

Since November, CFPB Director Rohit Chopra has doubled down on his decision to disregard lawmakers’ requests to cease activities by filing numerous lawsuits against companies days before the new Administration takes over and issuing politically-driven, misguided rules and regulations. While the next Administration will be able to make key determinations about many of these last-minute actions, it will require a review and undoing by the next Administration, which wastes resources of both government and the private sector.  

This is in stark contrast to other regulators – Comptroller of the Currency Michael Hsu, FDIC Chairman Martin Gruenberg, and Federal Reserve Vice Chair for Supervision Michael Barr all testified before Congress that no rulemakings would take place until after the change in Administrations.

While the outgoing CFPB leadership may see this as burnishing its legacy, these actions have only eroded trust in the CFPB and government institutions more broadly. These partisan activities reiterate the need for immediate actions to correct the political nature of the Bureau, as well as justify CBA’s calls for long-term reforms needed to reinstate credibility and durability at the agency.

Rulemakings, Regulations, and Requests for Information

Supervision and Enforcement Actions

The Bottom Line 

Director Chopra may view his flurry of last-minute actions as a political win. But, illustrated by the marked contrast of all of the other Federal banking regulators, the CFPB’s lame duck actions sow further damage to the durability and credibility of an agency tasked with overseeing one of the nation’s most important industries and the millions of consumers banks serve. 

To bolster Americans’ trust and confidence in the CFPB, the Trump Administration and new Congress have a unique and important opportunity to institute meaningful reforms to the CFPB. 

In a new white paper released earlier this week, CBA provided a blueprint to do just that, outlining immediate and longer-term actions policymakers should take to ensure the CFPB remains a strong, durable, and credible regulator for decades to come, regardless of what political party occupies the White House.

CBA Advocacy

  • To read the white paper – “Reforming the CFPB into a Strong and Durable Regulator Americans Deserve” – outlining immediate and long-term actions the incoming Administration could act upon and, separately, legislation for the new Congress to prioritize to transform the Bureau to better serve American consumers, click HERE.
  • To read CBA’s “Vision for America – A Bank Policy Agenda for All,” which outlines the retail banking industry’s priorities, beliefs, and positions on a number of consumer-focused financial services policy issues, click HERE.
  • To read CBA President and CEO Lindsey Johnson’s op-ed on the need for financial regulations to focus on sound policy, not partisan politics, click HERE.

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