We beforehand reported on adjustments to management on the Shopper Monetary Safety Bureau (CFPB), the halt of all actions on the CFPB, and the impacts to the monetary providers trade. The surroundings continues to evolve, intensifying uncertainty for regulation and the trade, because the federal businesses accountable for regulating the monetary providers trade, together with the CFPB, the Federal Deposit Insurance coverage Company (FDIC), and the Workplace of the Comptroller of the Foreign money (OCC) (collectively, “the Businesses”), are impacted by the brand new administration’s overhaul of regulatory businesses.
CFPB
As mentioned in our earlier articles, momentary management on the CFPB included Treasury Secretary Scott Bessent, named as performing director of the CFPB by President Trump on January 31, 2025, and the Director of the Workplace of Administration and Funds (OMB) Russell Vought, named as performing director of the CFPB on February 7, 2025. Beneath Bessent and Vought, all CFPB actions had been halted, the CFPB’s headquarters had been closed starting the week of Feb. 10, and the following CFPB funding draw from the Federal Reserve was canceled.
On February 11, 2025, President Trump appointed Jonathan McKernan to be the everlasting Director of the CFPB, pending Senate affirmation. McKernan, most not too long ago a member of the Board of Administrators on the FDIC, will lead the CFPB following his affirmation listening to, leaving Vought head of the CFPB till then. Moreover, Mark Calabria, who headed up the Honest Housing Finance Administration (the present Receiver for Fannie Mae and Freddie Mac) through the first Trump administration, is reportedly working with the OMB as a liaison to the CFPB and dealing on centralizing the Businesses below OMB, pursuant to a February 18 government order (EO).
Amidst the halt to actions, it’s been reported that greater than 70 CFPB workers have been fired and greater than $100 million in vendor contracts have been canceled. The appointment of a everlasting CFPB Director with intensive regulatory company expertise could also be an indication that the CFPB will stay, albeit considerably reformed below the brand new administration. Nonetheless, with President Trump and the Division of Authorities Effectivity’s (DOGE) Elon Musk calling for a whole dismantling of the CFPB, the way forward for the CFPB nonetheless stays to be seen.
FDIC & OCC
The FDIC workers has been considerably decreased in latest weeks, with roughly 500 workers accepting the Trump administration’s deferred resignation buyouts and 170 probationary workers terminated in addition to the rescission of greater than 200 job presents. The OCC equally has begun layoffs, with round 76 workers reportedly terminated as of February 21, 2025.
Travis Hill was named Appearing Chairman of the FDIC Board of Administrators on January 20, 2025, and has since promised to conduct a wholesale assessment of financial institution laws, steering, and manuals. Hill most not too long ago served as Vice Chairman of the FDIC and beforehand served as senior counsel at america Senate Committee on Banking, Housing, and City Affairs. On the OCC, Appearing Comptroller Rodney Hood changed then-Appearing Comptroller Michael J. Hsu on February 7, 2025. Hood was most not too long ago on the Nationwide Credit score Union Administration Board (NCUA).
Potential Company Consolidation or Centralization?
Along with the above talked about centralization of Businesses below the OMB, hypothesis within the trade was additional fueled by reviews that the OCC was planning to just accept the switch of workers from each the FDIC and CFPB. The OCC shortly denied these assertions.
The reviews got here a day after an EO, “Guaranteeing Accountability for All Businesses” which requires beforehand unbiased businesses to submit any new laws to the White Home, often coordinate insurance policies and priorities with the White Home, and set up White Home Liaison places of work. The EO applies to the FDIC, OCC, and FTC, amongst others, however particularly excludes the Board of Governors of the Federal Reserve System. Notably, and maybe most controversially, the EO states that the president and lawyer common have the only authority to interpret legal guidelines for the manager department and that no company worker might present interpretations that contravene that of the president and lawyer common, together with by means of “issuance of laws, steering, and positions superior in litigation.”
Potential Impacts
Whereas the implications of the EO and potential centralization are nonetheless unfolding, many within the trade have been desperate to see both the elimination or reform of the CFPB. However, many are weary of the regulatory burden offered by an inconsistent state-by-state regulatory scheme in lieu of federal regulatory frameworks and the uncertainty stemming from these government actions. Nonetheless, the appointment of Company heads and OMB officers with years of each trade and regulatory expertise below their belts could also be an indication that the Businesses aren’t going wherever any time quickly.
Authorized challenges have already been levied towards a number of of the above mentioned actions, making certain uncertainty concerning their near- and long-term results. For instance, the Nationwide Treasury Workers Union sought a brief injunction to dam additional firings on the CFPB. Decide Amy Berman Jackson of the U.S. District Court docket for the District of Columbia has issued an order approving the pause on CFPB firings in addition to prohibiting the deletion of CFPB information.
As mentioned in our prior article, monetary establishments ought to proceed to adjust to relevant legal guidelines and laws, regardless of the present upheaval. Whereas uncertainty over the enforcement and rulemaking authority on the Businesses continues, till a whole shuttering of sure businesses and/or recission of federal laws, monetary establishments ought to plan to adjust to all relevant legal guidelines and laws.
Moreover, we proceed to anticipate elevated state exercise each in laws and enforcement, which echo initiatives taken by the Businesses. For instance, New York has already launched proposed laws to restrict overdraft charges, just like the CFPB’s finalized — however not but efficient — Overdraft Lending Rule. A very environment friendly legislative improvement is Virginia’s Home Invoice 2515 (HB 2515), which was launched January 8, 2025, and authorized by Virginia’s legislature in somewhat over a month on February 18, 2025. HB 2515 amends the Virginia Shopper Safety Act by including prohibited practices, together with limitations on obligatory charges and mandating bank card surcharge disclosures.
Want Help?
We anticipate continued authorized challenges on this area in addition to elevated state regulatory exercise. We proceed to observe the state of affairs on the Businesses and can present updates as acceptable. You probably have any questions regarding any of the problems mentioned above, Foley’s Monetary Providers Regulatory Group is effectively versed in federal and state legal guidelines and laws impacting the monetary providers trade. Foley actively counsels shoppers on compliance points in addition to offering enforcement and litigation assist. For extra data, please contact any of the authors of this text or your Foley & Lardner lawyer.
The put up CFPB, FDIC, and OCC Updates: Firings, Appointments, and Potential Consolidation appeared first on Foley & Lardner LLP.
