The Consumer Financial Protection Bureau (CFPB) – the federal agency tasked with enforcing, implementing, regulating and supervising consumer financial products and services across the country – is expected to see dramatic changes during President Trump’s second administration.
Indeed, within the first three months of his current term, there have already been several key developments affecting the consumer financial products and services industry. This overview provides a summary of where things currently stand with the CFPB, and where they are likely to head throughout the second Trump administration.
Background
The CFPB was created in 2010 following the 2008 financial crisis. It was formed to, among other things, “implement Federal consumer financial laws through rules, orders, guidance, interpretations, statements of policy, examinations, and enforcement actions.” 12 U.S.C.A. § 5492 (a)(10). Given this breadth, the CFPB has a role in regulating and enforcing laws, such as the Truth in Lending Act, Real Estate Settlement Procedures Act, Equal Credit Opportunity Act and Fair Credit Reporting Act, to name a few. The types of products and services that the CFPB regulates include payday loans, auto loans, credit cards, home mortgages and student loans.
Importantly, the CFPB is an executive agency led by a single director. Because the director is appointed by the president with the advice and consent of the Senate, the CFPB’s priorities historically realign every election cycle with the new administration’s agenda. The CFPB also is unique because, unlike other federal agencies that are funded annually by Congress, the CFPB director instead is authorized to petition the Federal Reserve System for funds in an amount that it deems “reasonably necessary to carry out” the agency’s duties. 12 U.S.C.A. § 5497(a)(1)-(2).
Key Developments
Acting Director Appointed
On February 7, 2025, President Trump appointed Russell Vought, Director of the Office of Management and Budget (OMB), as acting director of CFPB. Given Vought’s role with the OMB, his additional appointment as acting director for the CFPB is consistent with President Trump’s prior statements about his intention to reduce the federal workforce. It should be noted that Vought’s tenure as the acting director will only be temporary – he was eligible to be appointed as an acting director under the Federal Vacancies Reform Act because he had already been confirmed as director of the OMB. Thus, President Trump appointed him to carry out his administration’s policies only until the Senate confirms Jonathan McKernan, the current nominee, for CFPB director.
Vought immediately sent an email to all CFPB employees on February 8, directing them to cease nearly all operations. In particular, Vought told CFPB employees to (i) not approve or issue any proposed or final rules or guidance, (ii) suspend the effective date of all final rules previously issued, (iii) stay all investigative and enforcement actions, (iv) not open any new investigations, and (v) refrain from publishing any communications or research.[1] The email also informed employees that the CFPB offices would be closed from February 10-14.
In addition to the agency-wide email, Vought further posted on social media that he would not be taking a draw of funding from the Federal Reserve System, and that additional funding for the agency was not “reasonably necessary” for it to carry out its duties.[2] Viewed together, Vought’s actions were construed as an effort to dismantle the CFPB by freezing all of its operations and electing not to seek further funding for its operations.
Litigation Filed
On February 9, the National Treasury Employees Union (NTEU), which includes CFPB employees, filed suit against Vought in the U.S. District Court of Columbia. The lawsuit seeks to enjoin Vought from carrying out his directives, and further seeks a declaratory judgment that his actions are an unlawful attempt to effectively dissolve the CFPB in contravention of Congress’ authority. The court entered a temporary restraining order (TRO) on March 28, which enjoined Vought from (i) enforcing his stop-work order, (ii) terminating any CFPB employees except for cause, (iii) issuing any notices of reduction in force, and (iv) deleting, impairing or removing any CFPB data or research, among other things. The TRO also ordered him to provide office space or remote access for CFPB employees.
Vought and the Trump administration appealed the court’s decision and also filed a Motion to Stay the TRO pending the outcome. On April 11, the D.C. Circuit Court of Appeals granted the stay in part, specifically staying a portion of the TRO that prohibited Vought “from terminating or issuing a notice of reduction in force to employees whom defendants have determined, after a particularized assessment, to be unnecessary to the performance of defendants’ statutory duties.”[3]
Relying on this language, on April 17, Vought and CFPB leadership emailed approximately 1,500 employees (90% of CFPB staff) to notify them that their positions had been eliminated.[4] On the previous day, CFPB’s chief legal counsel had issued a memo to staff outlining the CFPB’s new priorities. Per this memo, the CFPB would shift its resources away from supervision and enforcement of laws and regulations that can be enforced at the state level. Going forward, per the memo, the CFPB’s supervision and enforcement efforts would prioritize protection of service members, their families and veterans. Also, “[p]roblems with mortgages” would remain a top priority, while the CFPB would focus less on issues with medical debt, student loans and digital payments.
The NTEU immediately filed a motion in the District Court of Columbia on April 17, asking the court to enjoin CFPB management from its reduction in force. The NTEU primarily argued that a wholesale reduction of 90% of the CFPB’s staff could not reasonably be the product of a “particularized assessment”, nor could such a reduction allow the CFPB to continue to perform its statutory duties. On April 18, the court ordered Vought and the Trump administration to cease any firings or reductions in force until it held its scheduled evidentiary hearing. Also on April 18, the CFPB and Vought filed an emergency motion with the D.C. Circuit Court of Appeals, seeking clarification on its prior order. On April 28, the D.C. Circuit Court of Appeals vacated its prior order and effectively reinstated the district court’s preliminary injunction order.[5] While the D.C. Circuit Court of Appeals acknowledged that its order may be to the detriment of the CFPB, such harm was also offset by the court fast-tracking the appeal altogether. Oral argument for the CFPB’s appeal is already set for May 16, 2025.
Shifting Priorities
Although the case remains pending and the size of the CFPB’s workforce remains a looming issue, the CFPB has taken other actions to evidence its shift in priorities. For one, the CFPB dismissed a lawsuit in March against several of the nation’s largest banks – including Bank of America, JPMorgan, Chase and Wells Fargo – for violating consumer financial laws due to their apparent rush to get Zelle, their peer-to-peer payment platform, to market.
Other significant cases that have been dismissed in recent months include a lawsuit against Capital One alleging it cheated customers out of $2 billion in interest, a lawsuit against Rocket Mortgage for purported kickbacks with real estate brokers, another suit against a student loan servicer for pursuing consumers for discharged student loan debt, and another against Heights Finance for charging excessive loan costs and junk fees to consumers.[6] The dismissal of these lawsuits, which were all commenced by the Biden administration, is a telltale sign of the change in CFPB priorities. The actions also align with the priorities outlined in the CFPB’s memo.
Additionally, on April 14, the CFPB submitted a joint motion for consent judgment in Chamber of Commerce of the United States of America vs. CFPB. This action challenged the validity of the CFPB’s controversial final rule on credit card late fees that was promulgated during the Biden administration. By its submission of the joint motion for consent judgment, the CFPB not only acknowledged that it exceeded its authority, but also agreed to vacate its final rule on credit card late fees altogether.
The CFPB’s shift in priorities is evident, and may be a welcome sign for providers of consumer finance products and services. However, it is premature to fully appreciate the CFPB’s new vision and structure under the second Trump administration given the pending litigation and upcoming Senate confirmation hearing for Jonathan McKernan. Given this, it is recommended that any provider of consumer financial services or products first seek legal counsel before implementing any changes to its products, services, or internal procedures.
In Summary: What You Should Know
- While the CFPB may shift its focus away from specific financial products or services during the second Trump administration, this does not impact existing federal and state consumer financial laws and regulations (unless the CFPB explicitly vacates a regulation, as in Chamber of Commerce of the United States of America vs. CFPB). Accordingly, providers of consumer financial services or products should first consult an attorney to assess the risk and liability exposure prior to any drastic changes to its products or services.
- Given the CFPB’s desire to shift its regulation and enforcement of laws that can be done at the state level, it is foreseeable that several states will ramp up their enforcement efforts to fill any void. Providers of consumer financial services and products should reassess their compliance with state laws and regulations and be prepared for additional supervision, regulations and enforcement at the state level.
- The agenda and priorities of the CFPB during the second administration have yet to fully materialize. First, the outcome of Vought’s attempted reduction in force of the CFPB is set for hearing later this month and will likely be further appealed by both parties. Also, the CFPB’s priorities will be additionally defined once the Senate confirms Jonathan McKernan or another nominee as director of the CFPB.
If you have questions about how these federal actions may impact your business, please contact Monique Jewett-Brewster or your regular Lathrop GPM attorney.
[1] A copy of Russell Vought’s email to CFPB employees was published on X. See https://x.com/PhilipWegmann/status/1888409309937070128.
[2] Russell Vought’s social media post is available here: https://x.com/russvought/status/1888423503537360986.
[3] The April 11, 2025 Order from the D.C. Circuit Court of Appeals can be found here: https://media.cadc.uscourts.gov/orders/docs/2025/04/25-5091LDSN4.pdf
[4] https://apnews.com/article/donald-trump-doge-cfpb-elon-musk-456b747c367fccbcf3b74d2893cd1a35
[5] The April 28, 2025 Order from the D.C. Circuit Court of Appeals can be found here: https://media.cadc.uscourts.gov/orders/docs/2025/04/25-5091LDSN4.pdf
[6] See generally https://www.npr.org/2025/02/27/nx-s1-5311561/cfpb-confirmation-mckernan-lawsuits-capital-one