The Consumer Financial Protection Bureau (CFPB) is undergoing a significant transformation under the Trump administration. More than 1,500 employees are expected to receive layoff notices as part of an extensive restructuring effort. This move aims to reallocate resources and redefine the agency's core functions, emphasizing tangible consumer harm rather than perceived infractions.
With a renewed focus on depository institutions and specific areas such as mortgages, data furnishing violations, and consumer contracts, the CFPB plans to reduce its supervisory activities by half. The agency will also step back from areas where state regulators hold substantial authority, ensuring no duplication of efforts with other federal agencies.
Redefining Supervision and Enforcement Strategies
In light of recent changes, the CFPB is reassessing its approach to supervision and enforcement. By reducing supervisory events by 50%, the agency intends to concentrate on resolving consumer complaints effectively. Furthermore, it shifts its attention primarily toward banks and depository institutions, aligning more closely with the 2012 distribution model.
This strategic shift marks a departure from previous practices where over 60% of supervision was directed at non-depository entities. Now, the CFPB aims to direct 70% of its oversight efforts towards banks and depository institutions. The memo accompanying these changes emphasizes focusing on clear statutory authority and avoiding novel legal theories that could complicate enforcement. Consequently, this approach ensures that the agency's actions remain firmly grounded in established regulations, enhancing transparency and accountability in its operations.
Streamlining Operations and Deprioritizing Certain Areas
Beyond reshaping its enforcement priorities, the CFPB is also streamlining its operational scope. Under the leadership of Acting Director Russell Vought, the agency has identified several areas for deprioritization. These include initiatives related to justice-involved individuals, medical debt, peer-to-peer lending, student loans, remittances, consumer data, and digital payments.
By stepping back from these domains, the CFPB seeks to avoid overlapping with state regulators' jurisdictions unless legally mandated. Additionally, the agency will eliminate duplicative regulatory functions handled by other federal bodies. Mortgages, data furnishing violations, consumer contracts, fraudulent overcharges, and fees, along with inadequate controls to protect consumer information, will take precedence. This reorientation underscores the CFPB's commitment to addressing material and measurable consumer damages while refraining from interventions based solely on subjective perceptions of consumer behavior.