In a dramatic series of events, the Consumer Financial Protection Bureau (CFPB or Bureau) has undergone leadership changes, signaling a significant shift in its regulatory approach. These changes began with the firing of Director Rohit Chopra by President Donald Trump and have continued with the resignation of General Counsel Seth Frotman and the appointment of Russell Vought as Acting Director.

Leadership Changes

On February 1, Rohit Chopra confirmed his departure as Director of the CFPB in a letter to President Trump. President Trump designated Secretary of the Treasury Scott Bessent as Acting Director. In the press release announcing his designation, Director Bessent stated, “I look forward to working with the CFPB to advance President Trump’s agenda to lower costs for the American people and accelerate economic growth.” A few days later, Seth Frotman, the CFPB’s General Counsel, announced his resignation and departed the Bureau on February 7. Frotman, who had been with the Bureau since October 2021, played a substantial role in advancing initiatives to regulate Big Tech and curb so-called “junk” fees. One of his final acts was to encourage states to follow the CFPB’s lead in addressing evolving risks associated with new technology and corporate consolidation. This call to action was part of a broader strategy outlined in a CFPB report titled “Strengthening State-Level Consumer Protections,” discussed here, released just days before President Trump took office.

Over the weekend, Russell Vought, recently confirmed as Director of the Office of Management and Budget, took over as Acting Director of the CFPB. Vought has already made significant moves to halt much of the Bureau’s work.

Closure of CFPB Headquarters and Work Suspension

In an internal email, CFPB staff and contractors were informed that the Bureau’s headquarters would be closed for the week, and all staff were required to work remotely. Acting Director Vought also issued directives to cease virtually all CFPB activities, including supervision, examinations, stakeholder engagement, and pending investigations. Staff were instructed to suspend the effective dates of all rules that have been issued, but have not yet gone into effect. In a post on X, Vought announced that the CFPB would not be taking its next draw of unappropriated funding, citing the Bureau’s current balance of $711.6 million as excessive:

“This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”

Lawsuit by National Treasury Employees Union

On Sunday, February 9, the National Treasury Employees Union, which includes members who are employed by the CFPB, filed a lawsuit in the District Court for the District of Columbia, noting the actions of the Acting Director and arguing that the effort to “shut down” the CFPB was unconstitutional because it violated the Congressional mandate in the Dodd-Frank Act for the Bureau to perform the functions outlined in the statute.

Our Take

The flurry of activity relating to the CFPB leaves the agency in an uncertain state, since the new administration and Acting Director’s ultimate intentions about the CFPB are unclear. The actions taken thus far may simply signal a pause a re-evaluation of the Bureau’s activities, similar to the one that occurred in 2017 when Mick Mulvaney was appointed as the Acting Director, or they may be a prelude to more significant action. We will be monitoring events closely and reporting on them here when more clarity develops relating to the Bureau’s future. We do note, however, that the overly aggressive actions of Director Chopra, especially the flurry of rulemaking, enforcement and supervisory activities undertaken in the last month of the Biden administration, likely contributed to a feeling in the new administration that the agency needed to be brought under control and have its course corrected.