Scott Bessent, President-elect Donald Trump's choice to be secretary of the Treasury, appears before the Senate Finance Committee for his confirmation hearing, at the Capitol in Washington, Thursday, Jan. 16, 2025. (AP Photo/J. Scott Applewhite)

Scott Bessent Halts CFPB Activities in First Move as Acting Consumer Watchdog

In a decisive first action as the newly appointed acting head of the U.S. Consumer Financial Protection Bureau (CFPB), Treasury Secretary Scott Bessent has ordered an immediate halt to nearly all pending activities within the agency. This includes investigations, rulemaking, litigation, and public communications, according to an internal email obtained by Reuters.

Bessent’s move underscores the Trump administration’s commitment to reducing regulatory oversight, particularly in the financial sector, as part of a broader effort to realign government regulation with industry interests. The decision comes just days after former CFPB Director Rohit Chopra announced that he had been fired, marking a sharp departure from the agency’s previous enforcement-heavy approach.

A Shift in Direction

At precisely 11 a.m. on Monday, Bessent sent a directive to all CFPB staff and contractors, instructing them to cease enforcement activities to ensure “consistency with the goals of the administration.” The move signals a dramatic shift in the agency’s priorities, aligning with Trump’s broader deregulatory agenda aimed at fostering a more business-friendly environment.

The impact of this decision was immediate. Attorneys representing the CFPB informed a U.S. Court of Appeals that they had been instructed to seek a pause in ongoing litigation, further confirming that regulatory activities were being placed on hold indefinitely.

Political Backlash

The decision has sparked sharp criticism from Democratic lawmakers and consumer advocates. U.S. Senator Elizabeth Warren, who played a key role in the creation of the CFPB following the 2008 financial crisis, strongly condemned the move. Warren, the leading Democrat on the Senate Banking Committee, called the halt “an invitation to predatory corporate misconduct.”

“Shutting down CFPB enforcement actions that are on the verge of delivering money into the pockets of working people is at odds with President Trump’s claim that he wants to lower costs for families – which he has done next to nothing on so far,” Warren stated.

Consumer rights groups have also expressed alarm, arguing that the decision could weaken protections against financial abuses and leave vulnerable consumers exposed to predatory practices by banks and lenders. Many had anticipated regulatory rollbacks under Trump, but the blanket suspension of CFPB activities represents a more extreme approach than some had expected.

Implications for the Financial Sector

The business community, particularly financial institutions, is likely to welcome this regulatory pause. Many industry leaders have long criticised the CFPB’s aggressive enforcement stance, arguing that its regulations stifle economic growth and create unnecessary compliance burdens. Bessent’s move may signal a broader effort to rein in the agency’s influence, potentially leading to the rollback of key consumer protections.

However, critics warn that weakening consumer financial protections could have long-term consequences, potentially setting the stage for future financial crises. With the CFPB’s mission now in question, the balance between consumer rights and industry growth remains at the heart of an intensifying political debate.

Looking Ahead

As Bessent takes the reins at both the Treasury Department and the CFPB, it remains unclear how far the administration will go in reshaping financial regulation. While Trump has long pledged to dismantle regulatory “red tape,” the extent to which consumer protections will be rolled back is yet to be seen.

For now, the pause in CFPB activities represents a significant turning point in U.S. financial oversight, raising critical questions about the future of consumer finance regulation in the Trump era.