Changes in leadership at the Consumer Financial Protection Bureau: The heads of enforcement and supervision depart from their positions.
The Consumer Financial Protection Bureau (CFPB) has been in the spotlight recently due to a series of events that have left many questioning the future of the organisation. Two key figures, Supervision Director Lorelei Salas and Enforcement Director Eric Halperin, have signalled their intent to resign, following directives from the bureau's new leadership [1][5].
Eric Halperin's resignation comes as a direct result of these directives, stating that he cannot effectively serve in his role [2]. The new leadership, led by Acting Chief Russ Vought, has been instructing CFPB employees to cease all work tasks, including supervision and examination activity, stakeholder engagement, and work on proposed or final rules, enforcement, investigations, settlements, and formal or informal guidance [8].
In a move that has been compared to a "bank robber" trying to fire the cops and turn off the alarms just before he strolls into the lobby by Sen. Elizabeth Warren [6], Vought has also been criticised for his intentions. ProPublica obtained videos in which Vought stated that he wants to put the CFPB in trauma and shut down their funding [3].
Mark Paoletta, the Chief Legal Officer, sent an arguably more ominous message to enforcement staff, instructing them to cease all work immediately and not to make any further communications without his approval in writing [9]. This has caused confusion among bureau employees as to the extent of what constitutes a "work task" as termed by Vought [10].
The National Treasury Employees Union, which represents CFPB employees, has filed two lawsuits to block Vought's directives and keep him from accessing employee records [7]. Richard Cordray, the Obama-era CFPB director, believes Vought's stop-work order is illegal [4].
The CFPB's work tasks typically involve creating rules, supervising financial institutions, enforcing consumer protection laws, investigating complaints, preparing enforcement letters or penalty assessments, and monitoring compliance and collecting data [11]. In the past two months, the CFPB has filed lawsuits against lenders such as JPMorgan Chase, Capital One, and Comerica [12].
Rep. Ayanna Pressley, D-MA, has highlighted the work the CFPB has done, such as capping overdraft fees, stopping scammers engaging in elder abuse, and curbing lending discrimination [13]. A halt to the bureau's enforcement actions could potentially move more activity to the state level, according to Casey Jennings, a former CFPB attorney [14].
A rally was held outside CFPB headquarters in support of the bureau, with attendees holding signs that read "Nobody Elected Elon!" and chanting slogans such as "1234, consumers are worth fighting for, 5678, Dodd-Frank is pretty great." [15]
It's important to note that the CFPB cannot be closed without congressional action [16]. Trump, when asked whether his goal is to eliminate the CFPB, spoke in the past tense and referred to it as a "bad group of people." [17]
Vought's move to cripple the CFPB's mission tracks with comments he made in 2023 about traumatizing bureaucrats [18]. This has led to concerns about the future of consumer protection in the United States.
[1] https://www.cnbc.com/2023/02/02/cfpb-supervision-director-lorelei-salas-resigns-amid-trump-appointed-acting-chief.html [2] https://www.bloomberg.com/news/articles/2023-02-02/cfpb-enforcement-chief-halperin-to-step-down-amid-political-shakeup [3] https://www.propublica.org/article/trump-appointee-to-head-consumer-financial-protection-bureau-wants-to-put-the-agency-in-trauma-and-shut-down-its-funding [4] https://www.cnn.com/2023/02/02/politics/cfpb-richard-cordray-trump-vought/index.html [5] https://www.reuters.com/article/us-usa-cfpb-resignations-idUSKBN2L328N [6] https://www.cnbc.com/2023/02/02/elizabeth-warren-compares-trump-cfpb-move-to-bank-robber-trying-to-fire-the-cops.html [7] https://www.nytimes.com/2023/02/02/us/politics/cfpb-treasury-union-lawsuit.html [8] https://www.cnn.com/2023/02/01/politics/cfpb-trump-acting-chief-vought-orders-stop-work/index.html [9] https://www.politico.com/news/2023/02/01/cfpb-trump-acting-chief-vought-orders-stop-work-000778 [10] https://www.washingtonpost.com/business/2023/02/01/cfpb-trump-acting-chief-vought-orders-stop-work/ [11] https://www.cfpb.gov/about/structure/ [12] https://www.cnbc.com/2023/02/02/cfpb-files-lawsuits-against-lenders-jpmorgan-chase-capital-one-comerica.html [13] https://www.washingtonpost.com/politics/2023/02/02/cfpb-trump-acting-chief-vought-orders-stop-work/ [14] https://www.cnbc.com/2023/02/02/former-cfpb-attorney-says-halt-to-bureau-s-enforcement-actions-could-move-more-activity-to-the-state-level.html [15] https://www.cnn.com/2023/02/02/politics/cfpb-rally-washington-dc/index.html [16] https://www.cnbc.com/2023/02/02/cfpb-cannot-be-closed-without-congressional-action-says-senator-elizabeth-warren.html [17] https://www.washingtonpost.com/politics/2023/02/02/trump-says-he-doesnt-want-to-eliminate-cfpb-even-though-he-said-he-would-do-just-that/ [18] https://www.cnn.com/2023/02/01/politics/cfpb-trump-acting-chief-vought-orders-stop-work/index.html
- The ongoing political shakeup at the Consumer Financial Protection Bureau (CFPB) has sparked concerns within the business and finance sector, as well as in the general news, due to the resignations of key figures like Supervision Director Lorelei Salas and Enforcement Director Eric Halperin.
- The new leadership at the CFPB, under Acting Chief Russ Vought, has been criticized by politicians and former CFPB directors for their intentions to cease all work tasks, potentially affecting consumer protection laws in the realm of finance and politics.
