The acting director of the consumer agency put a freeze on its activities. Critics say consumer protection should return to banking regulators and the FTC.
The Consumer Financial Protection Bureau (CFPB) was ordered to stop all activities last week under newly minted Secretary of the Treasury Scott Bessent.
Bessent, who was at the time the acting director of CFPB, put a freeze on all rule-making, enforcement investigations, and litigation against financial institutions, which is part of CFPB’s normal function.
This action is similar to what took place just days before when the U.S. Agency for International Development was paused for an investigation into how the agency was functioning.
According to the agency’s website, CFPB “implements and enforces federal consumer financial law and ensures that markets for consumer financial products are transparent, fair, and competitive.”
It’s the job of the CFPB to work as an agency independent of the government to “make consumer financial markets work for consumers, responsible providers, and the economy as a whole.”
For example, the agency in January finalized a rule that banned the inclusion of medical bills on credit reports, a change that it said would benefit 15 million Americans.
Jurisdiction for the agency includes banks, credit unions, mortgage services, debt collectors, even for-profit colleges, among other financial institutions.
The agency is authorized to investigate institutions and initiate legal proceedings. Included in that is the ability to issue subpoenas known as civil investigative demands (CIDs) to root out potential legal violations. The CIDs can require that a target submit documents, emails, reports, answers to written questions, and oral testimony.
Agency Changes
CFPB announced on Feb. 3 that Bessent would serve as the acting director in place of Rohit Chopra, whose departure was made public just days before. The announcement indicated that Bessent’s appointment was valid beginning on Jan. 31.
Chopra wrote in his resignation letter to President Donald Trump on the importance of the agency’s job of protecting consumers and cracking down on abuse and junk fees, among other issues.
“I hope that the CFPB will continue to be a pillar of restoring and advancing economic liberty in America, and I wish you good luck in serving our great country,” wrote Chopra, who was appointed by President Joe Biden.
