The US administration has directed the Consumer Financial Protection Bureau (CFPB) to suspend nearly all activities, effectively halting the agency’s operations, according to AP.
The CFPB, established to protect consumers in the wake of the 2008 financial crisis, has long been a target of conservative criticism. Russell Vought, the newly appointed director of the Office of Management and Budget, issued the directive on 8 February 2025, as confirmed by The Associated Press. The order instructs the CFPB to cease work on proposed regulations, suspend the effective dates of finalised rules not yet in force, and halt investigative activities, including the initiation of new probes. Additionally, the agency has been directed to end supervision and examination efforts.
On 9 February 2025, administration officials announced the temporary closure of the CFPB headquarters in Washington, D.C., from 10 to 14 February. No official reason was provided for the closure, though employees were instructed to work remotely unless otherwise notified. The CFPB, created by Congress as part of the 2010 financial reform legislation, cannot be formally eliminated without legislative action. However, the agency’s leadership holds discretion over enforcement actions, which could be significantly reduced under the new directive.
Further complicating the agency’s future, the CFPB homepage was inaccessible starting on 9 February (see below), displaying a ‘page not found’ message. Additionally, billionaire entrepreneur Elon Musk commented ‘CFPB RIP’ on social media platform X, underscoring speculation about the agency’s fate.
Screen capture: CFPB official website
Vought also announced that the CFPB would not withdraw its next round of funding from the Federal Reserve, stating that its existing reserves of USD 711.6 million were excessive. The CFPB, funded by the Fed to maintain independence from political influence, has recovered nearly USD 20 billion for US consumers since its inception through debt cancellations, compensation, and loan reductions.
Recent CFPB news
The directive comes shortly after the CFPB filed a lawsuit against Capital One, alleging deceptive practices that cost customers over USD 2 billion in lost interest payments. Critics of the decision, including Dennis Kelleher of Better Markets, argue that the move benefits Wall Street and financial institutions at the expense of consumer protection, AP states.
The administration’s action highlights tensions between President Trump’s populist campaign promises to lower costs for working-class families and his broader efforts to reduce government regulation. The CFPB had been examining the feasibility of capping credit card interest rates, a proposal Trump endorsed during his campaign.
Although the CFPB can still accept consumer complaints, it can no longer conduct examinations or pursue ongoing investigations. Additionally, concerns have been raised regarding access to regulatory data, particularly if Musk’s X launches a payments platform, as the CFPB maintains oversight over competitors such as Cash App.
The directive follows a similar order from Treasury Secretary Scott Bessent on 3 February 2025, marking the latest step in the administration’s broader effort to limit the scope of federal regulatory agencies.
Source: thepaypers.com
Additional reading:
With CFPB Closed, Open Banking Awaits Next Steps
The Consumer Financial Protection Bureau is shuttered — at least for now.
In the wake of Russell Vought — head of the Office of Management and Budget — moving to the acting director role at the CFPB, supervisory and examination activities were halted Sunday (Feb. 9).
On Monday (Feb. 10), news came that Vought sent an email to CFPB staffers that said, “Employees should not come into the office. Please do not perform any work tasks.”
Online, much of the CFPB website is hobbled, with a 404-error message, job postings scrubbed, and links to past rulemaking and enforcement actions here and there.
The debate over the agency’s funding is likely to rage, and it’s no secret that the President Donald Trump administration and Republicans in Congress are targeting the structure wherein the CFPB gets its money from the Federal Reserve.
Open Banking Rule Hangs in the Balance
If future rulemaking is indeed dead in the water and existing rules could be cut back, the sweeping moves would presumably include the October issuance of the final rule that would shape how personal financial data is handled, and by extension, how open banking evolves.
For now, the final rule took effect last month, and banks must eye a phased-in approach to compliance.
The rule, which is based on Section 1033 of the Dodd-Frank Act, mandates that banks, credit unions and other financial institutions must make consumers’ financial data available upon request to consumers and authorized third parties. This data includes information about transactions, costs, charges and usage related to consumer deposit accounts, credit cards and payment services, data in payment apps and digital wallets as well as bank accounts.
The rule also establishes strict guidelines for third parties seeking to access consumer data, including data security measures.
For banks, there’s a requirement for standardized API development and a ban on institutions from charging fees for data access.
As for the timeline, the rule is being implemented in phases, with larger providers subject to the rule sooner than smaller ones, per the CFPB. The largest banks will have to comply by April 1, 2026, while the smallest institutions will have until April 1, 2030. Certain small banks and credit unions are not subject to the rule.
What Happens Next?
The new, 119th Congress will likely wield much power in scuttling rules, as the Congressional Review Act lets lawmakers overturn rules stretching back over six months through joint resolutions of the Senate and House.
The banks themselves, through the Bank Policy Institute and the Kentucky Bankers Association, filed a lawsuit against the CFPB in October, alleging that the rule “seeks to cut off that private development and replace it with a complicated, expensive, mandatory regulatory framework that Congress never authorized.”
The lack of fee structure also disallows banks to recoup costs while adding to the operational burden of compliance (as financial institutions would bear liability for breaches), the lawsuit said.
If the rule is struck down, it’s possible that banks will re-examine their open banking efforts and strike FinTech partnerships that are economically advantageous to both sides of the provider equation as data is shared. There are already aggregators that act as a data-transfer bridge between banks and FinTechs.
The organic, market-based approach would bring more momentum to embedded finance and other services. The PYMNTS Intelligence report “Consumer Sentiment About Open Banking Payments” found that 46% of consumers surveyed would be “highly willing” to use open banking options for bill payments and financial services. However, only 11% of consumers in the United States have used open banking payment options, which leaves 89% of a thus-far untapped market.
Although the compliance deadlines put forth by the CFPB are months away, the technical and operational lifts required to implement the rule are heavy. Will banks push to meet those deadlines even as the fate of the CFPB is being determined, or will they find their own avenues to innovate with FinTechs to share and protect data in the spirit of the rule?
Plaid is an example here, as the data connectivity platform enables customers to store their verified identity and account information with Plaid and reuse it across other Plaid-powered apps. This reduces sign-up time for new services by as much as 90% in some cases and improves the conversion rate as well as the overall consumer experience.
In an October interview with PYMNTS on open banking, Brian Dammeir, head of payments for Plaid, said that the rule offers a roadmap.
“Fraud liability in bank-based payments, particularly on the ACH rail, is well-established,” he said. “But as we move to a real-time world, those rules will need to evolve, and consumers will need to understand their protections.”
“The banks that see this as an opportunity rather than a compliance obligation will be the ones to succeed,” Dammeir said.
Source: pymnts.com
Additional reading:
Fintechs Move to Defend CFPB Open Banking Rule as Agency Recedes
- CFPB’s rule allows customers to easily share account data
- US administration stopped all agency litigation work
A trade group representing financial technology companies is moving to defend the Consumer Financial Protection Bureau’s open banking rule against a lawsuit from big banks while the agency’s litigation work is on hold.
The Financial Technology Association on Wednesday (12/2/25) is filing a motion in the US District Court for the Eastern District of Kentucky to intervene in a lawsuit the Bank Policy Institute filed in October to block the CFPB’s open banking rule.
Source: BloombergLaw
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.
