Treasury’s Bessent tells CFPB staff to stop everything

Treasury Secretary Scott Bessent, who was named acting director of the Consumer Financial Protection Bureau, has directed the agency’s staff to halt all rules and enforcement actions.

Within an hour of Bessent being formally named to lead the agency, the CFPB’s staff were instructed to halt all work. Memo states that Bessent has been named acting director, effective Jan. 31, and that he “is committed to appropriately stewarding the agency pending new leadership.”

The memo says that “in order to promote consistency with the goals of the Administration, effective immediately, unless expressly approved by the Acting Director or required by law, all employees, contractors, and other personnel of the Bureau are directed: Not to approve or issue any proposed or final rules or formal or informal guidance.”

The memo has six bullet points with instructions “to suspend the effective dates of all final rules that have been issued or published but that have not yet become effective.” Among them are the $5 overdraft fee rule and $8 credit card late fee rule. Most of the CFPB’s recent rules have been challenged and are in active litigation, and it is unclear whether a new acting director will choose to defend or settle certain lawsuits. 

Staff was directed “not to commence, take additional investigative activities related to, or settle enforcement actions,” and “not to issue public communications of any type, including publication of research papers.”

In addition, the memo says that staff are “Not to approve or execute any material agreements, including related to employee matters or contractors.”

Staff also were directed “not to make or approve filings or appearances by the Bureau in any litigation, other than to seek a pause in proceedings.”

CFPB employees were told that if they have any questions, to “please raise issues through your existing management for consideration by the Acting Director.”

Several employees who spoke on condition that their names not be used to avoid retaliation, said that the memo instructs the agency to stop everything including any internal work on investigations.

Some areas of the bureau that are not impacted by the memo include consumer response and consumer education. It is unclear if examinations will continue given that the memo only put a halt to investigations. 

The memo was not a surprise to many banking experts given that President Trump issued an executive order immediately after his inauguration telling all agency heads to stop all rulemakings. He sent a similar order in 2017, as did President Biden in 2021, though at the time it was unclear if the order covered independent agencies like the CFPB. 

Rob Nichols, president and CEO of the American Bankers Association said the trade group has long claimed that many of the actions taken by former CFPB Director Rohit Chopra exceeds the bureau’s statutory authority and “harmed our economy and imposed significant costs on American consumers.”

“We urge Secretary Bessent to begin reversing the damage caused by these misguided regulatory actions and stand ready to support his efforts to chart a better course for the Bureau,” Nichols said in a press release. 

Bessent — or his as-yet unnamed advisors — have dozens of important decisions to make regarding what comes next including whether the agency plans to defend past CFPB actions and rules in court. Bank experts have expected a freeze of existing rules and enforcement actions.  

The Consumer Bankers Association had called on the new administration to extend the effective dates of the CFPB’s recently enacted overdraft rule, the credit card late fee rule and the 1033 open banking rule. Multiple banking groups want all three rules rescinded, pending litigation settled and new proposals reissued. 

The Trump administration sent a mass email to federal employees last week telling 2.3 million civil service workers to return to the office full-time, and also giving them a so-called buyout offer of resigning by Feb. 6 or face further action. Many banking experts expect the administration to terminate all senior staff with political positions.

Trump also issued an executive order to strip civil service protections from federal employees and re-categorize thousands of civil servants as political appointees, enabling the administration to fire them.