Federal Agency Gone Wild: Why the CFPB Needs Immediate Reform — and a New Chair

18.01.2025 06:21

With President Joe Biden’s term nearly over, federal agencies should be winding down activities for the year and preparing for enormous changes in their leadership and policy goals. However, one relatively small but powerful agency, the Consumer Financial Protection Board (CFPB), is doing the opposite.

The CFPB is tasked with the worthy goal of helping represent consumers in the financial industry, though it has often opted to pursue politically motivated, ideological goals rather than sticking to its core mission.

This has been especially true under its current chair, Rohit Chopra. At this point, Chopra should be packing up his office and preparing to hand over the reins to President-elect Donald Trump’s yet-to-be-announced pick. Instead, under his leadership, the CFPB has launched a last-minute assault on a wide array of American businesses and advanced a series of last-minute regulations that could prove harmful and costly to American consumers and companies.

The 11th-hour shenanigans are almost unbelievable. In the days before Christmas, while many Americans were focused on the holidays, Chopra’s CFPB was filing lawsuits almost as quickly as children opening advent calendars.

On Dec. 20, the CFPB went after nearly every large bank in the country with a lawsuit that alleges improper oversight of the Zelle payment platform, which is jointly owned by seven large banks. Zelle pointed out that fraud on its network has actually fallen by 50 percent since 2023.

Just a few days later, on Dec. 23, the CFPB targeted the world’s largest retail company, Walmart, with a lawsuit alleging that it forced delivery drivers into a payment system that resulted in junk fees. Walmart responded by noting the rushed nature of this action and its failure to follow due process.

The same day, the CFPB filed another dubious lawsuit against Rocket Homes, claiming that the company’s referral incentive program was actually an illegal kickback scheme. Rocket pulled no punches in its response, calling CFPB’s actions a “reckless and shocking misuse of public resources.”

It hasn’t let up off the gas, filing another suit against Capital One on Jan. 14 over an alleged “bait and switch” scheme with interest rates on its high-yield savings accounts. While the CFPB claims consumers are being harmed by lower-than-expected rates, a recent Wall Street Journal editorial points out that Capital One’s rates are “in line with those offered by other high-yield banking competitors” and “are higher than what many big banks offer on their standard savings accounts.”

Obviously, Chopra sees the writing on the wall. His days as the leader of the CFPB are rapidly coming to an end and he is trying to make his mark on the U.S. financial system while he still can. He’s even suggesting he might try to stick around for a portion of the Trump administration, which is laughable.

Trump’s pick to head the CFPB could squash these actions, but before a changing of the guard, Chopra is rushing to implement an aggressive last-minute regulatory agenda, despite a stern warning to hit the brakes from leaders in Congress, like Senate Banking Committee Chairman Tim Scott (R-SC).

Chopra’s decision to ignore these requests is particularly concerning because other rulemaking agencies such as the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Reserve all agreed with Chairman Scott to pause new regulatory actions.

Yet, Chopra’s agency is plowing ahead with highly controversial regulations like a rule to expand its authority to cover nonbank entities that make personal loans. This is part of a last-minute power grab that Chairman Scott correctly called “little more than an attempt to expand the CFPB’s jurisdiction and grant the agency more authority to pick winners and losers in the financial services system.”

The Trump administration needs to fix this mess, starting with a complete restructuring of the agency. As it stands, the CFPB is insulated from congressional scrutiny because it doesn’t receive its funding from the normal appropriations process, like the vast majority of federal agencies. This means that the CFPB does not receive proper oversight from taxpayers.

While the Supreme Court upheld the CFPB’s structure in May of last year, the Trump administration and Congress can and should change the law to make the agency more accountable to the people. Further, it should unwind the politically motivated 11th-hour flurry of regulations and lawsuits that should have never seen the light of day.

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Brandon Arnold is the executive vice president of the National Taxpayers Union.

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