The Consumer Financial Protection Bureau (CFPB) is shut down.
The unwinding started 11 days ago, Saturday, February 1, when President Donald Trump fired CFPB Director Rohit Chopra. That move was not a surprise — in fact the surprising aspect of the termination was that it had not come on the first day of President Trump’s second term.
But then the CFPB upheaval kept coming. On February 3, Treasury Secretary and acting CFPB Director Scott Bessent ordered the bureau to halt work on all regulatory matters. On Friday, February 7, Elon Musk and the Department of Government Efficiency (DOGE) gained access to the CFPB. On his own platform X that afternoon, Musk ominously stated, “CFPB RIP.” The next day, the CFPB website was taken down. Soon after, newly confirmed Office of Management and Budget (OMB) Director Russell Vought, who had replaced Bessent as acting CFPB director, told CFPB staff they should not come into the office Monday.
While this story is evolving rapidly — as is every matter in Washington these days — this week, we attempt to provide the latest news on the CFPB and analysis about how the CFPB’s “annihilation” (as some staff members have called it), may affect consumers, enforcement and recent rulemakings, and the financial technology and services industries.
What’s Happening At The CFPB Right Now?
While the CFPB cannot be eliminated without an act of Congress, not much is going on at the bureau right now. Even social media accounts, like the CFPB’s website, have been suspended.
On Saturday, Acting Director Vought ordered employees to “cease all supervision and examination activity” and “stakeholder engagement.” That same day, he announced he would not take the CFPB’s next drawdown of funding from the Federal Reserve. “The Bureau’s current balance of $711.6 million is in fact excessive in the current fiscal environment,” Vought wrote on social media. “This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”
According to news reports, Chief Operating Officer Adam Martinez told staff Sunday that CFPB headquarters would be closed for at least a week. Other publications reported CFPB employees who went to the building Sunday to retrieve items they would need to work remotely were barred from the building by security. (A printout of instructions to the security guards reviewed by Politico suggested staff may be able to telework at some point.)
Other current top CFPB officials are not waiting to see what happens. Yesterday, Assistant Director for the Office of Enforcement Eric Halperin and Assistant Director for Supervision Policy Lorelei Salas resigned after being placed on administrative leave. (Zixta Martinez, the CFPB’s deputy director who also placed on administrative leave, has not stepped down, at least yet.)
Meanwhile, President Trump is making moves to install a permanent director at the CFPB. Last night, he informed the Senate that he plans to nominate Jonathan McKernan, who until this past weekend was a Republican member of the Federal Deposit Insurance Corporation board, as the full-time director of the CFPB. It is, of course, unclear what McKernan’s agenda will look like given efforts to dismantle the bureau.
Meanwhile, the DOGE is still toiling away at the CFPB. According to The Hill, DOGE employees have gained “access to the full scope of information stored at the agency, including sensitive bank examination and enforcement records.”
What Happens To Proposed And Final Rulemakings?
Over the last several months, the CFPB has issued several Notice of Proposed Rulemakings (NPRMs), including for regulations regarding digital payment privacy and consumer protection and the collection, use, and monetization of consumer payment and other personal financial data. Because these rules were only at the proposal stage, under the suspension of work order at this point they cannot move ahead. (It is worth noting, however, that the CFPB email addresses where interested parties are to submit comments regarding these rules appear to still be working.)
As a reminder, work on not-yet-finalized-regulations already had been suspended by an executive order (EO) signed by President Trump in January. As legal experts at Morgan Lewis noted, that order also required the CFPB to:
- Halt all rulemaking the agency has not yet transmitted to the Federal Register until an official appointed by President Trump has reviewed the rule;
- Withdraw any rules the agency transmitted to the Federal Register so they may be reviewed by the Trump-appointed official; and
- Consider whether the agency should postpone, for 60 days from the date of the EO, the effective date of any rule issued by the agency.
Rules that were recently finalized by the CFPB — the Section 1033 open banking rule, for example — are finished and, therefore, can take effect. Many of these rules, including the open banking rule, are subject to litigation, however. It is unclear whether the Trump administration will defend those rules in court, however. If the administration opts not to, other entities may file a motion to step into the federal government’s shoes to defend the rule. Indeed, this morning the Financial Technology Association did just that with the open banking rule. A federal court will now review and approve or deny that motion.
What Happens To Consumers?
As Bloomberg noted, the shutdown of the CFPB “casts uncertainty over its supervision of banks, fintechs, and payments companies.” In particular, “Future oversight of Alphabet Inc.’s Google and Meta Platforms Inc.’s use of consumers’ financial data is in question along with next steps on Biden-era rules related to medical debt and buy now, pay later loans.”
Without a doubt, the CFPB has put money back into consumers’ pockets. As a Los Angeles Times columnist noted, according to its latest financial report, from the launch of the CFPB in 2012 through January 30, 2025, the bureau had returned $19.7 billion to 195 million people. It also has collected $5 billion in civil penalties.
At a Senate Banking Committee hearing yesterday, Federal Reserve Chair Jerome Powell told lawmakers the CFPB shutdown could leave a gap in the federal government’s oversight of large banks and their compliance with consumer protection laws.
At that hearing, Sen. Elizabeth Warren (D-Mass.), the architect of the CFPB, said shuttering the agency is akin to “putting a sign on every checking account, every credit card, every mortgage application and every car loan: ‘Cops have been fired: Let the scams begin.’” Indeed, according to AXIOS, the CFPB shutdown “throws into question the future of several pending lawsuits.” That list of litigation includes a suit against JPMorgan, Bank of America, and Wells Fargo over alleged fraud on the Zelle payment network and another case against a bank accused of charging unbanked senior citizens unnecessary fees to disburse their Social Security payments.
Even American Action Forum, a right-leaning organization often critical of the CFPB, has questioned the shutdown. Yesterday, the group’s founder Douglas Holtz-Eakin wrote, “Eakinomics is hardly the CFPB’s biggest fan. … The problem with the abrupt shutdown, however, is that the other regulators have already exited a wide array of consumer-focused protections to make way for the CFPB. … The CFPB can and should be unwound, but halting operations at the CFPB without a plan for replacing these protections is not without risks to both consumers and the administration.”
Holtz-Eakin is right. The Dodd-Frank Act, which created the CFPB, transferred jurisdiction of a number of existing statutes from other financial regulators to the bureau, including in the housing finance market. This fact is perhaps why the Mortgage Bankers Association, a coalition of financial institutions that originate and service consumer mortgages, submitted a brief to the Supreme Court in the lead-up to its May 2024 decision on the CFPB’s funding, arguing that eliminating the CFPB and its rules would bring chaos to the home loan market.
“It does peel back the ability to enforce all of the protections Congress put in place to ensure we don’t have another housing crisis,” Julie Margetta Morgan, former CFPB associate director of research, monitoring, and regulations during the Biden administration, told Bloomberg.
What Happen Next?
First, expect a lawsuit. CFPB staff unionized during the Biden administration so they are likely to sue the Trump administration and Acting Director Vought, arguing that only Congress has the authority to direct the CFPB to halt its operations.
Second, expect more pushback from Congress. Indeed, this morning, House Financial Services Committee Ranking Member Maxine Waters (D-Calif.), Sen. Warren (D-Mass.), and 200 other House and Senate Democrats sent a letter to Acting Director Vought and Treasury Secretary Bessent asking them to remove DOGE operatives from the CFPB, to restore all internal and external systems and operations, and to allow the CFPB to resume operations.
On a purely practical level, the CFPB shutdown means Republicans on Capitol Hill will not be able to realize cost savings as part of their reconciliation efforts by significantly reducing the agency’s funding. Will that irritate Republicans and, if their constituents start to feel the pain, will GOP lawmakers speak up? Only time will tell.
Finally, while the drama at the CFPB will no doubt continue this week, it is important to remember that, under Section 1024 of the Dodd-Frank Act, state attorneys general have explicit authority to enforce the Consumer Financial Protection Act. Even if the CFPB is dissolved, attorneys general in California, New York, Massachusetts, and many other blue states will aggressively pursue enforcement of consumer protection statutes and regulations, including those promulgated by the CFPB that are already effective.
In other words: the eradication of the CFPB may be more complicated – and take longer – than the Trump administration is hoping.