We beforehand reported on modifications to management on the Client Monetary Safety Bureau (CFPB), the halt of all actions on the CFPB, and the impacts to the monetary companies trade. The setting continues to evolve, intensifying uncertainty for regulation and the trade, because the federal companies accountable for regulating the monetary companies 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 Companies”), are impacted by the brand new administration’s overhaul of regulatory companies.
CFPB
As mentioned in our earlier articles, short-term management on the CFPB included Treasury Secretary Scott Bessent, named as appearing director of the CFPB by President Trump on January 31, 2025, and the Director of the Workplace of Administration and Price range (OMB) Russell Vought, named as appearing director of the CFPB on February 7, 2025. Below Bessent and Vought, all CFPB actions have been halted, the CFPB’s headquarters have 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 Truthful Housing Finance Administration (the present Receiver for Fannie Mae and Freddie Mac) throughout the first Trump administration, is reportedly working with the OMB as a liaison to the CFPB and dealing on centralizing the Companies below OMB, pursuant to a February 18 govt 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 in depth regulatory company expertise could also be an indication that the CFPB will stay, albeit considerably reformed below the brand new administration. Nevertheless, 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 diminished 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 affords. 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 evaluate of financial institution laws, steerage, and manuals. Hill most not too long ago served as Vice Chairman of the FDIC and beforehand served as senior counsel at the US 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 Companies below the OMB, hypothesis within the trade was additional fueled by stories that the OCC was planning to simply accept the switch of workers from each the FDIC and CFPB. The OCC shortly denied these assertions.
The stories got here a day after an EO, “Making certain Accountability for All Companies” which requires beforehand unbiased companies to submit any new laws to the White Home, frequently 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 legal professional basic have the only real authority to interpret legal guidelines for the chief department and that no company worker could present interpretations that contravene that of the president and legal professional basic, together with by way of “issuance of laws, steerage, 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. Alternatively, 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 govt actions. Nevertheless, 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 Companies aren’t going wherever any time quickly.
Authorized challenges have already been levied towards a number of of the above mentioned actions, guaranteeing uncertainty concerning their near- and long-term results. For instance, the Nationwide Treasury Workers Union sought a short lived injunction to dam additional firings on the CFPB. Choose Amy Berman Jackson of the U.S. District Courtroom for the District of Columbia has issued an order approving the pause on CFPB firings in addition to prohibiting the deletion of CFPB knowledge.
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 Companies continues, till an entire shuttering of sure companies and/or recission of federal laws, monetary establishments ought to plan to adjust to all relevant legal guidelines and laws.
Moreover, we proceed to count on elevated state exercise each in laws and enforcement, which echo initiatives taken by the Companies. 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 growth is Virginia’s Home Invoice 2515 (HB 2515), which was launched January 8, 2025, and accepted by Virginia’s legislature in somewhat over a month on February 18, 2025. HB 2515 amends the Virginia Client Safety Act by including prohibited practices, together with limitations on necessary 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 watch the scenario on the Companies and can present updates as applicable. You probably have any questions regarding any of the problems mentioned above, Foley’s Monetary Companies Regulatory Group is nicely versed in federal and state legal guidelines and laws impacting the monetary companies trade. Foley actively counsels shoppers on compliance points in addition to offering enforcement and litigation help. For extra info, please contact any of the authors of this text or your Foley & Lardner legal professional.
The put up CFPB, FDIC, and OCC Updates: Firings, Appointments, and Potential Consolidation appeared first on Foley & Lardner LLP.
