- House Republicans and the Trump administration appear to be abandoning plans to dismantle the CFPB after a 13-month court defeat.
- Only Congress can abolish the CFPB, and no amount of executive orders or funding cuts can eliminate it. Federal courts have repeatedly blocked the administration’s efforts to do so unilaterally.
- Rather than continue a losing legal battle, the CFPB under Acting Director Russ Vought appears to be moving toward writing new rules on open banking, data collection and small-dollar lending.
The Trump administration’s effort to dismantle the Consumer Financial Protection Bureau has run into an insurmountable wall: the law.
after 13 months court loss (PDF file), It appears that both House Republicans and the White House are accepting what legal experts have been saying – only an act of Congress can actually shut down the CFPB.
Semaphore And politico A meeting between House Financial Services Committee (HFSC) Republicans and CFPB Acting Director Russ Vought was reported to have focused on the future of the agency. Four lawmakers spoke to Semaphore, including Representative John Rose (R-TN) who said the CFPB was “unlikely to go away” in the “current environment.”
Why can’t executive action eliminate the CFPB?
The CFPB was created by Congress Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (PDF file). This matters because an agency established by federal statute can only be abolished by another federal statute. This means that both houses of Congress would need to pass a bill, and the President would need to sign it.
No executive order, budget directive, or administrative reorganization can repeal any Act of Congress.
The Trump administration tried to get around it by effectively dismantling the agency from within: freezing enforcement, cutting oversight, planning to eliminate 90 percent of the staff, and more.
But the CFPB’s union sued and the courts intervened. That case is blocking attempts to end the shutdown as early as 2025.
The full DC Circuit Court of Appeals heard oral arguments in the NTEU 335 case in late February, and a decision is expected in the summer of 2026.
The central legal question is straightforward: Can the executive branch unilaterally dismantle an agency created by Congress? The administration’s track record in this case suggests that the courts are skeptical.
Pivot: From shutdown to industry-friendly rulemaking
With the courts blocking abolition, the administration is shifting to Plan B: using the CFPB’s authority to write the rules the financial industry wants.
HFSC members told both outlets that they discussed data collection, open banking, small dollar lending and other topics with Watt.
The financial industry wants this for several reasons:
- The agency has exclusive statutory authority over some of the most consequential regulations in financial services.
- No other federal agency can write open banking rules that would allow big banks to charge for access to consumer data.
- Regulation is a double-edged sword, in that some companies and industries need to deal with bad actors because it can damage everyone’s reputation.
- You may not get clarity on operations if the organization that oversees your business closes down.
However, consumer groups are concerned about what these rules could mean for consumers.
What consumers need to know
The net result for consumers is a CFPB that exists but may not be paying as much attention to the individual consumer as it once did. Enforcement actions have declined sharply. And the focus on rule-making points towards deregulation.
MPs told Semaphore they discussed “Opportunities to rein in the agency without shutting it down, including establishing greater congressional oversight“.
Watt is reportedly testifying before the House Budget Committee as OMB director on April 15, which could give lawmakers a chance to ask him about his CFPB actions. At that time we may get more information about the future.
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