Anticipated Changes to the CFPB Under Trump Administration

By Pete Schroeder and Tatiana Bautzer

NEW YORK (Reuters) – Bank executives and lawyers expect the Trump administration will significantly limit the U.S. Consumer Financial Protection Bureau (CFPB), although the president's populist tendencies may allow for some oversight activities.

The CFPB has been a longstanding target of Republicans who claim that Director Rohit Chopra's aggressive agenda exceeds its legal authority in regulating and penalizing financial firms. Discussions at a New York banking conference indicated that Chopra’s methods, including informal guidance and enforcement actions, would likely be rolled back.

John Wells, a partner at WilmerHale and former deputy enforcement director at the CFPB, stated, "It's almost unquestionable that the bureau will be retracting most of the non-rule guidance it has issued under Chopra."

Chopra is expected to either resign before Trump’s inauguration or be dismissed shortly thereafter. The CFPB has yet to comment on this situation.

Experts at the conference cautioned against expecting immediate or sweeping reforms within the agency. The first Trump administration maintained some operations at the CFPB and promoted populist policies such as interest rate caps on credit cards.

Michael Williams, West Virginia’s Solicitor General, remarked on the uncertainty surrounding state actions in response to federal policies like the credit card interest cap.

Significant revisions, such as altering the CFPB's leadership structure or budgetary controls, would require more than Trump's executive action; they necessitate Congressional approval.

New leadership at the CFPB may reassess existing initiatives without instituting major changes all at once, suggesting a gradual approach. Wells noted, "It’s more likely that things are going to change matter by matter."

Financial firms have often challenged CFPB rules through litigation, including actions related to credit card late fees and open banking regulations. The CFPB might withdraw from pursuing those lawsuits under Trump, but states may continue the fight.

New York Assistant Attorney General Christopher Filburn mentioned the possibility of states stepping in to defend certain rules if the CFPB pulls back.