Regulatory heads at the Consumer Financial Protection Bureau (CFPB) leave their posts
In a surprising turn of events, Russ Vought, the acting chief of the Consumer Financial Protection Bureau (CFPB), has issued a stop-work order to employees, potentially leading to a significant shift within the agency. This decision has been met with controversy, as it could potentially lead to a purge of the workforce and a halt in the CFPB's enforcement actions.
The CFPB, established in 2011, is responsible for protecting consumers from unfair, deceptive, or abusive practices in the financial marketplace. Its enforcement actions, if halted, would not revert the industry to pre-CFPB times, but could potentially lead to a fragmented enforcement landscape, with more activity shifting to the state level.
Vought's order tracks with comments he made in 2023, where he expressed a desire to put bureaucrats in trauma and shut down their funding, drawing a parallel to his previous statements about the Environmental Protection Agency. Mark Paoletta, the bureau's Chief Legal Officer, followed up with an email to enforcement staff, instructing them to cease all work immediately.
The stop-work order has created uncertainty for businesses and raised concerns about undercutting by competitors with lower ethics, according to David Super, a professor at Georgetown University. The order has also led to resignations from key personnel, such as the CFPB's supervision director, Lorelei Salas, and enforcement director, Eric Halperin.
Halperin, the CFPB's enforcement chief, cited the directives from the bureau's new leadership in his resignation email. Senator Elizabeth Warren, D-MA, compared the current situation at the CFPB to a "bank robber" trying to fire the financial cops and turn off the alarms.
Notably, the CFPB has been instrumental in curbing lending discrimination, stopping scammers engaging in elder abuse, and capping overdraft fees, as noted by Rep. Ayanna Pressley, D-MA. The bureau has also recently filed lawsuits against lenders such as JPMorgan Chase, Capital One, and Comerica. A halt to its enforcement actions could potentially result in more activity at the state level.
The National Treasury Employees Union, which represents CFPB employees, has filed two lawsuits in a federal court in Washington to block Vought's directives and keep DOGE from accessing employee records. The future of the CFPB remains uncertain, with the stop-work order and potential resignations creating a challenging environment for the agency.
It is important to note that the CFPB cannot be closed without congressional action. The bureau's operations, however, are currently on hold, with employees instructed not to perform any work tasks. Failure to abide by these instructions from the bureau's new leadership constitutes insubordination, according to Paoletta.
[1] Understanding Work Tasks in Government Agencies: A Clarification of Job Roles and Responsibilities. (n.d.). Retrieved from https://www.govtech.com/workforce/understanding-work-tasks-in-government-agencies-a-clarification-of-job-roles-and-responsibilities.html
- The halt in enforcement actions by the Consumer Financial Protection Bureau (CFPB) could potentially lead to a fragmented landscape in finance, with more business regulations shifting to the state level.
- The controversial stop-work order issued by Russ Vought, the acting chief of the CFPB, has raised concerns in the politics and general-news sectors, with concerns about undercutting by less ethical competitors and uncertainty for businesses.
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