Anthony DiResta: Welcome to another podcast of Clearly Conspicuous. As we have noted in previous sessions, our goal in these podcasts is to make you succeed in this environment, make you aware of what's going on with both the federal and state consumer protection agencies, and give you practical tips for success. As always, it's a privilege to be with you.
CFPB Acting Director Orders Staff to Halt Enforcement Activity
Today, we discuss the future of the Consumer Financial Protection Bureau. In an email to staff of the CFPB, the agency's acting director ordered workers to cease "all supervision and examination activity." Again, it was an order for the workers to cease "all supervision and examination activities." Employees of the CFPB were instructed to cease all of this activity and all "stakeholder engagement," effectively stopping the agency's operations in an email from the Director of the Office of Management and Budget Russell Vought on Saturday evening. Mr. Vought, who was confirmed this week to lead the Office of Management and Budget, was on Friday named acting director of the Consumer Financial Protection Bureau, the federal government's financial industry watchdog. In his email to staff on Saturday, he reaffirmed earlier instructions from the previous acting director, Treasury Secretary Scott Bessent, who ordered last week that staff should not issue any new rules or guidance and cease all investigations. And I quote. "As acting director, I am committed to implement the president's policies consistent with the law and acting as a faithful steward of the bureau's resources," Mr. Vought wrote in the email, which was obtained by the media.
The agency, created by Congress in 2011 as a financial industry watchdog, cannot be closed without congressional action, but its director can freeze most of its actions by halting enforcement, weakening or repealing regulations, and softening its supervision of banks and other lenders. As we know, the agency has issued a number of high-profile regulations and enforcement actions over the years seeking to strengthen safeguards on mortgages, credit cards, loans and other consumer finance. In a Saturday evening post on X, Mr. Vought, who is an author of Project 25, the conservative blueprint for remaking the federal government, wrote that he had notified the Federal Reserve that the Finance Bureau "will not be taking its next draw of unappropriated funding because it is not reasonably necessary to carry out its duties." By the way, the agency is directly funded by the Federal Reserve outside the usual congressional appropriations process. And I quote, "The bureau's current balance of $711.6 million is in fact excessive in the current fiscal environment," he added in his post. "This spigot, long contributing to CFPB's unaccountability, is now being turned off," he said, using the agency's initials.
How Are CFPB Employees Responding?
On Saturday, some members of the union representing the Consumer Financial Protection Bureau's employees protested outside the agency's Washington building with signs mocking Elon Musk, whose government efficiency effort has impacted various federal agencies. Several members of Mr. Musk's team arrived at the agency on Friday morning and gained access to his headquarters and computer system. Later that day, Mr. Musk posted "CFPB R.I.P." with an emoji of a gravestone on X. Hours after Mr. Musk's post, the home page of the bureau's website was updated with a "404 page not found" message.
Key Takeaways
So here's the conclusion. There's clearly and appears to be an effort to eliminate the CFPB, and we'll keep you posted on that effort. But businesses, practically speaking, need to keep in mind the role of the state attorneys general, private actors, the media and the FTC's Division of Financial Practices, which can operate quite similar to the CFPB when it comes to enforcement actions. So please stay tuned for further programs as we identify and address these key issues and developments. And I wish you continued success and a meaningful day. Thank you.
