US Treasury Chief Halts Consumer Watchdog's Activities

In a significant move, President Trump has appointed Treasury Secretary Scott Bessent as the acting director of the Consumer Financial Protection Bureau (CFPB), effectively freezing all agency activities. This decision, announced on Monday, has raised concerns among consumer advocates and financial institutions alike, as it could potentially impact ongoing investigations and enforcement actions, as well as the implementation of recent CFPB rules.

Bessent's appointment comes after President Trump fired CFPB Director Rohit Chopra, who had been leading the agency since 2021. In his first day in office, Bessent ordered the CFPB to halt all rulemaking, communications, litigation, and other activities, including enforcement actions. This freeze is in line with President Trump's executive order, which requires agencies to halt new rulemaking and review existing rules.

The regulatory freeze is expected to have significant implications for the CFPB's ongoing investigations and enforcement actions. According to an email obtained by Bloomberg Law, Bessent ordered the CFPB to halt all enforcement actions, including investigations and settlements. This means that the CFPB will not be able to open new enforcement investigations or continue existing ones, and it will not be able to enter into enforcement settlements.

The consequences of this freeze for consumers and financial institutions are substantial. For consumers, the halt in enforcement actions may mean that they will not receive refunds or other relief for harms caused by financial institutions that have violated consumer protection laws. Additionally, the freeze may prevent the CFPB from taking action against financial institutions that engage in predatory or abusive practices, leaving consumers vulnerable to further harm.

For financial institutions, the freeze may create uncertainty about the CFPB's enforcement priorities and the potential for future enforcement actions. This uncertainty could lead to increased compliance costs as financial institutions seek to ensure that their practices align with the CFPB's regulations and guidance. Additionally, the freeze may prevent the CFPB from providing clarity on emerging issues in the financial services industry, such as the regulation of buy now, pay later lenders and data brokers.

The regulatory freeze is also expected to impact the implementation of recent CFPB rules, including those related to medical debt, overdraft fees, and data brokers. The rule on medical debt, which was set to take effect on March 17, 2025, may be delayed due to the freeze. This delay could allow consumer reporting agencies to continue using medical debt information in credit reporting, potentially impacting consumers' access to credit and financial services. Similarly, the rule on overdraft fees, which was set to take effect on October 1, 2025, may also be delayed, preventing banks and credit unions from implementing the new regulations.

The data broker proposal, which was released as a notice of proposed rulemaking in January 2025, may also be impacted by the regulatory freeze. If the proposed rule is delayed or not implemented, consumers may continue to face privacy concerns and potential misuse of their personal data by data brokers. Additionally, the financial services industry may not have to comply with the new regulations, potentially leading to increased data collection and sharing without proper consumer consent.

In conclusion, the appointment of Scott Bessent as acting director of the CFPB and the subsequent regulatory freeze have the potential to significantly impact ongoing investigations and enforcement actions, as well as the implementation of recent CFPB rules. The consequences for consumers and financial institutions are substantial, and it will be important to monitor the CFPB's actions in the coming months to see how these changes play out in practice.