What Leadership Changes at the CFPB Mean for Credit Unions 

Posted by Gracie Nelson on February 6, 2025

As expected, Consumer Financial Protection Bureau Director Rohit Chopra was removed from his position, and Secretary of the Treasury Scott Bessent was named Acting Director.  

As GoWest has previously reported, the change in CFPB leadership will result in a halt in the approval or issuance of any final rules or guidance, as well as a pause in the effective dates of all final rules that have not yet become effective. Bessent also directed the Bureau to cease initiating or advancing investigations and enforcement actions, and refrain from issuing public communications, including research publications. Additionally, a hiring freeze was implemented, and staff were directed not to approve or execute any material agreements or make appearances in litigation, except to seek pause in proceedings.  

Last week Senate Banking Chairman Tim Scott indicated that he was expecting a “blockbuster announcement” on President Trump’s choice as to who will take over the CFPB. While Bessent was named Acting Director earlier this week, this suggests that a permanent nominee may soon be announced. 

Scott Bessent: Background and Approach 

Bessent’s appointment as Acting Director signals the start of a more market-friendly approach, with potential changes in regulatory priorities, enforcement strategies, and the overall direction of the Bureau. 

Bessent was sworn in as Secretary of the Treasury on January 28, 2025. Prior to this, he held roles including Chief Investment Officer for Soros Fund Management, where he oversaw assets and advised on economic trends, and Chief Executive Officer and Chief Investment Officer of Key Square Capital Management, a global hedge fund focused on macro-investing. While he does not have a regulatory enforcement background, his experience in macroeconomic policy and market strategy suggests a focus on market-driven policies rather than aggressive oversight.  

During his confirmation hearing as Secretary of the Treasury, Bessent was questioned about his opinions on CFPB subjects including funding structure, enforcement  authority, and whether t the Bureau should be abolished. He clarified that statutory changes affecting both funding and enforcement would require the involvement of Congress and that: he looks  forward “to working with the incoming director of the CFPB as appropriate to ensure that the Bureau can be effective at fulfilling its statutory mission.”

A Different Look for the CFPB?

Efforts to eliminate, reframe, or defund the CFPB have been introduced in the past but may be gaining traction within the new administration. While Bessent has made it clear that he cannot unilaterally alter the Bureau’s structure, the administration’s expected approach to regulatory relief and enforcement suggests that significant changes could be in the works:

• Zeroing Out or Significantly Reducing CFPB Funding: As Acting Director of the CFPB, Bessent could influence the Bureau’s funding by reducing or eliminating the CFPB’s funding requests. However, eliminating funding would likely face legal challenges, as the CFPB has a statutory duty to fulfill, that requires funding. A likely scenario would be reducing the CFPB funding request to an amount that would allow the Bureau to minimally fulfill its statutorily required functions.
• Absorbing the CFPB into the Treasury: This would work hand in hand with dissolving CFPB funding and require congressional approval to effectively merge the Bureau into the Treasury Department. If implemented, the CFPB’s regulatory and enforcement powers would shift under Treasury oversight and integrate financial consumer protection within a broader economic policy framework.
• Eliminating the CFPB: The possibility of dissolving the CFPB entirely has also been discussed, particularly by the Department of Government Efficiency (DOGE). DOGE has long been critical of the CFPB’s funding structure and regulatory overreach. By eliminating the Bureau, DOGE hopes to transfer CFPB functions to other regulatory bodies (like Treasury for example) or state-level agencies. To eliminate the CFPB would require an Act of Congress.
  • It is important to note that statutory regulations overseen by the CFPB would need to be reassigned if the Bureau were dissolved or restructured—these regulations would not simply disappear.

For now, there are ongoing legislative efforts aimed at reforming the CFPB, including Senator Andy Barr’s bill to reintroduce the Taking Account of Bureaucrats’ Spending (TABS) Act, which would subject the CFPB to the traditional congressional appropriations process of most other federal agencies. Currently, the CFPB is funded through the Federal Reserve with minimal oversight.

What This Means for Credit Unions

While the full scope of changes continues to develop, we anticipate a stronger emphasis on reducing compliance burdens, reassessing previous rulemakings, and fostering a regulatory environment that promotes growth.

This would include the Congressional Review Act (CRA), which allows Congress to review and potentially overturn federal regulations issued by government agencies. Under the CRA, Congress can pass a joint resolution of disapproval to nullify a rule, which, if signed by the President, invalidates the rule. This process has been used in the past to overturn certain CFPB regulations. Notably, the finalized Overdraft rule is already under review.

Additionally, this leadership transition presents an opportunity for GoWest credit unions to engage with policymakers on key concerns and advocate for balanced regulations that support both consumer protection and the operational needs of credit unions. GoWest remains in close contact with the CFPB and looks forward to working with the Acting Director and, once named, the Director to positively impact the credit union community.

Conclusion

We will continue tracking these developments closely, letting you know of important updates. If you have any questions or comments, please feel free to reach out to your GoWest Regulatory team: Gracie Nelson at [email protected] and John Trull at [email protected].

Posted in Advocacy on the Move, Regulatory Advocacy.