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A Zombie CFPB?
As of Friday morning, the Consumer Financial Protection Bureau’s offices had been closed for the week by Acting Director Russell Vought. He sent workers home with strict instructions not to work. There’s a freeze on communications, examinations and investigations. Visiting the bureau’s website yields a 404 error, and over $100 million in vendor contracts have been cut, according to Bloomberg Law. Lorelei Salas, the supervision director, and Eric Halperin, the enforcement director, stepped down after receiving orders not to work, according to news reports. Vought also declined the CFPB’s next round of funding from the Federal Reserve, calling it “excessive” in a post on X. “This spigot, long contributing to CFPB's unaccountability, is now being turned off.”
The flurry of activity to halt the operations of the bureau, which was established via the Dodd-Frank Act of 2010, has drawn comparisons to efforts to dismantle USAID. The administration’s actions to place thousands of the foreign aid agency’s employees on leave worldwide was stalled by the U.S. District Court for the District of Columbia, but plaintiffs, including the American Foreign Service Association, alleged earlier this week that the administration had not complied with its orders.
Many of the Trump administration’s early actions appear to follow Project 2025, a 922-page document by The Heritage Foundation that detailed the conservative think tank’s plans to reshape the federal government. “Congress should abolish the CFPB and reverse Dodd-Frank 1061, thus returning the consumer protection function of the CFPB to banking regulators and the Federal Trade Commission,” the document said. Given a Supreme Court ruling last year that affirmed the CFPB’s funding structure, this would be addressed by Congress — not the president.
The CFPB’s shutdown — temporary or not — has financial institutions in limbo, says Dowse "Brad" Rustin IV, a partner at Nelson Mullins Riley & Scarborough who chairs the firm’s financial services regulatory practice. He believes the nomination this week of Jonathan McKernan, a recent director at the Federal Deposit Insurance Corp., to lead the bureau “would indicate some role for the CFPB in the near term,” he says. The Senate must confirm him.
McKernan would be well positioned to close up the CFPB’s operations if Congress chooses to abolish it, Rustin adds. “If you do plan to transfer the CFPB’s role to the FTC and the Fed, he would have the expertise to do so.”
• Emily McCormick, vice president of editorial & research for Bank Director
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