Predicting The Lasting Changes CFPB May Face In 2025
Read Time: 5 minsWith President-elect Donald Trump’s election victory and upcoming inauguration, big changes appear likely for the Consumer Financial Protection Bureau in 2025.
As the bureau faces its third major leadership transition within a decade, the scope and direction of its activities are expected to shift significantly under the new administration. These changes may affect not only the structure of the bureau itself but also its rulemaking, supervisory and enforcement prerogatives in the coming years.
Here are a few predictions on what might happen with the bureau in 2025.
A New Director and, Possibly, a New Structure
There is no chance that Rohit Chopra will remain the director of the CFPB after the inauguration, a fact he seemed to acknowledge during a congressional hearing on Dec. 11.
While Chopra has refused calls to resign from the bureau immediately, he has acknowledged that the U.S. Supreme Court’s 2020 decision in Selia Law LLC v. Consumer Financial Protection Bureau, makes clear the president can fire him without cause. Expect Chopra to either resign once Trump is inaugurated or be fired very early in Trump’s second term.
While some conservatives have called for the abolishment of the CFPB altogether,[1] that is probably not likely even under a Republican administration. However, because the Republican Party controls both the U.S. House of Representatives and the U.S. Senate, there is a decent chance that legislation will be passed that greatly limits the scope or reach of the CFPB’s authority. Perhaps the bigger question is who Trump will nominate to take over from Chopra.
During his first term, Trump’s original acting CFPB director, Mick Mulvaney, was a vocal critic and opponent of the bureau he was tasked with leading. At one point, he famously requested an operating budget of $0 for the CFPB from the Federal Reserve.[2]
Mulvaney nearly stopped enforcement actions and reduced the amount of civil monetary penalties obtained by the bureau during his tenure. For instance, the number of enforcement actions brought by the bureau dropped to 11 in 2018, down from a high of 56 in 2015 when Richard Cordray was director. Monetary relief obtained by the bureau also fell precipitously during Mulvaney’s time, down to around $460 million from a high of nearly $6 billion under Cordray.
Conversely, Trump’s second director, Kathy Kraninger, actually increased enforcement actions during her term. However, she also settled many actions for relatively small sums, including one for $1, while reducing consumer restitution as well.
If the past is prologue, the new CFPB director may be agnostic, if not downright hostile, to the bureau’s stated mission of consumer protection. And because Senate confirmationusually takes time, it is possible that Trump will utilize the Federal Vacancies Reform Act to appoint an interim director rather than permit someone aligned with Chopra to assume leadership while Senate confirmation of a permanent director is pending.
While it is a sure bet the bureau will have a new director in 2025, a potentially more significant change might be on the horizon.
For a number of years, Republicans in Congress have discussed and introduced legislation to modify the CFPB’s leadership structure from a single director to a five-person commission appointed by the president and confirmed by the Senate.[3] With control of all three branches of government, the Republican Party may make this a reality in 2025.
The Use of the Congressional Review Act to Roll Back Final Rules
Expect Congress to utilize the Congressional Review Act to roll back major rules recently enacted by the bureau.
The CRA was enacted in 1996 to strengthen congressional oversight of agencies’ rules. It requires an agency to submit a report on a new rule to both houses of Congress before the rule can take effect. This gives Congress the ability to enact a resolution of disapproval, which, if done, would invalidate the rule from taking effect. Congress has 60 days, starting when the rule is published in the Federal Register, to invalidate a rule under the CRA.
This is exactly what the Republicans did last time they controlled all three branches of government, invalidating in 2017 the CFPB’s arbitration agreements rule under the CRA,[4] among other final rules.
A handful of recently enacted final rules may be subject to congressional invalidation under the CRA, including the rulemaking based on Section 1033 of the Dodd-Frank Act that covers a consumer’s personal financial data rights, the bureau’s nonbank enforcement registry and a host of recent final rules involving so-called junk fees, which many Republicans in Congress claim amounts to agency overreach.
Impact on Current or Proposed Rules
A new director also is likely to curtail the bureau’s rulemaking agenda. However, not all rulemaking activities may be stopped. For instance, in September, Trump made headlines by calling for a cap on credit card interest.[5] As noted above, rules intended to cap fees may not survive, but Trump could still pursue it regardless.
The Possible End to Informal Rulemaking Activities
One constant criticism of the Chopra CFPB has been its use of informal interpretive rules, policy statements, advisory opinions, guidance, and circulars to impose requirements and shape industry outcomes — at the expense of the formal, time-consuming notice-and-comment rulemaking process required by the Administrative Procedure Act.
According to Chopra in a June 2022 blog post for the CFPB, such informal rulemaking activities were essential because the traditional notice-and-comment rulemaking procedure can result in “unnecessarily complex guidance and rules [that] impede consumer protection, and instead simply increases compliance costs.”
Many industry groups pushed back on these informal rulemaking actions,[6] noting that circumventing the APA in this manner limits the utility of such guidance implemented without industry input, potentially affects its durability when a change in administration occurs, and results in lawsuits seeking to enjoin the enforcement of such informal rules and policy statements. Similar criticism has been levied against the bureau by Republicans in Congress as well. [7]
Notably, such informal guidance only has power and force if the new director supports it. For example, in March 2021, the then-acting director of the CFPB, David Uejio, did not support certain policy statements issued by former director Kathy Kraninger, so he rescinded her policy statement on Abusive Acts from 2020.[8]
Similarly, it is expected that a new director would revise or rescind the June circular that warns firms against “deception” in contract fine print, among others.[9]
While it is true that an agency whose view of the law reliably flip-flops with each administration creates an uncertainty that is not beneficial to consumers or industry, the reality is that such agencies typically follow the lead of the White House. And it is likely that the CFPB’s new director under Trump will decline to enforce such informal guidance in 2025.
The End of Chevron Deference: A Double-Edged Sword
A potential fly in the ointment of any drastic changes the CFPB intends to make to existing rules or policies in 2025 is the end of Chevron deference.
While most conservatives cheered the end of Chevron deference this June in Loper Bright Enterprises Inc. v. Raimondo and Relentless Inc. v. U.S. Department of Commerce, the lack of deference afforded to agency interpretations could impede the new director’s efforts to rescind actions and rules taken by the bureau under Chopra.
In 2005, in National Cable & Telecommunications Association v. Brand X Internet Services, the Supreme Court held that an agency could change its interpretation of a statute and still receive deference so long as its new interpretation was within the range of reasonable interpretations. However, in light of the end of Chevron deference, it is not clear whether Brand X remains good law.
Either way, expect consumer and borrower-friendly organizations to attempt to leverage the end of Chevron deference against actions taken by a new CFPB director to rescind or alter prior interpretations of the law under Chopra.
What Lies Ahead
As the CFPB faces a new administration in 2025, significant changes to its leadership, structure and policies appear inevitable. From appointing a new director to potential rollbacks of recent rules and guidance, the bureau is poised for a shift in direction that could reshape its role in financial regulation.
While the extent of these changes will depend on the administration’s priorities and congressional action, it is clear that the CFPB’s agenda under Chopra will face considerable scrutiny and revision in the coming year.
This article was published by Law360 on January 1, 2025, and is reprinted with permission.
[1] https://clpblog.citizen.org/how-would-the-cfpb-fare-under-heritages-project-2025/.
[2] https://www.politico.com/story/2018/01/18/mulvaney-funding-consumer-bureau-cordray-345495.
[4] https://www.consumerfinance.gov/rules-policy/final-rules/arbitration-agreements/.
[5] https://www.emarketer.com/content/trump-cap-on-credit-card-interest.
[6] https://www.aba.com/advocacy/policy-analysis/letter-to-cfpb-re-1034-advisory-opinion.
[7] https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=408868.
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