A Less Active CFPB Is Expected After the Bureau’s Temporary Shutdown

A subdued Consumer Financial Protection Bureau is likely to emerge in the wake of the order issued over the weekend to close its offices for the week and have employees work remotely during that period.

Acting CFPB director Russell Vought, director of the United States Office of Management and Budget, issued the order to CFPB employees Saturday. Vought was appointed acting director when former director Rohit Chopra was fired by President Trump earlier this month.

Early Tuesday. Politico reported two senior officials at the CFPB, Assistant Director for the Office of Enforcement Eric Halperin and Assistant Director for Supervision Policy Lorelei Salas, had resigned.

A less active CFPB is seen as a positive for the payments industry, according to some observers.

“Russell Vought’s initial actions signal at a minimum that the agency will be reined in,” Eric Grover, principal at Intrepid Ventures, says by email. “A CFPB that hews narrowly to enforcing existing law will be good for the payments industry. Chopra’s absolutist CFPB was nakedly political and hostile to the payments and financial-services industries.”

Launched in 2011, the CFPB was created in response to the financial crisis of 2008. It was meant to serve as a watchdog to prevent unfair or deceptive practices by financial institutions and provide consumers with information needed to make informed decisions about financial services, such as credit cards and mortgages.

While Vought’s order raised concerns among CFPB supporters that his move is the first step toward eliminating the agency, odds of that happening are long. The order to do so would have to come from Congress, which voted to create the agency. Nevertheless, the CFPB’s director can determine what actions the agency takes.

“I think it’s unlikely that Congress in the near term will eliminate the CFPB,” Grover says. “However, acting director Russell Voight and whoever Trump nominates and Congress approves as permanent director are likely to curb the CFPB.”

In the wake of Vought’s order, the National Treasury Employees Union, which represents CFPB employees, filed a pair of lawsuits challenging it, according to NBC News. One lawsuit requested the court block the Department of Government Efficiency from accessing employee information, the other sought to block Vought’s order.

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A less active CFPB is expected to be welcomed by the financial-services industry which has been critical of the agency since its inception.

“In the last four years, the CFPB has viewed itself, not Congress, as the policymaker. It’s been paternalistic, political, and hostile to the industry it regulated,” Grover says. “That recipe wasn’t good for anybody and certainly isn’t appropriate for a regulator.”