Trump's Acting CFPB Chief Cuts Funding and Suspends Oversight Activities

Russell Vought, the newly appointed acting head of the Consumer Financial Protection Bureau (CFPB) under President Donald Trump, has effectively frozen the agency’s operations, cutting off new funding and ordering staff to suspend key activities.

In a February 9 post on X, Vought announced that he had notified the Federal Reserve that the CFPB would not be requesting its next draw of unappropriated funds. “The Bureau’s current balance of $711.6 million is excessive in the current fiscal environment,” Vought stated, explaining that the funds were not “reasonably necessary” for the agency to fulfill its duties.

The CFPB, established after the 2008 financial crisis, was tasked with regulating financial institutions like banks and money transfer services to prevent abusive practices and protect consumers. The agency also handles complaints about US-based cryptocurrency exchanges. However, in recent years, the CFPB has become a target for both financial and tech industries, particularly within the crypto sector.

Suspension of Oversight and Investigations

Vought, who was appointed to lead the CFPB on February 7, has taken swift action to wind down the agency’s operations. According to reports, Vought sent a memo to CFPB staff instructing them to cease all supervision and examination activities. The memo also directed staff to halt any ongoing investigations, refrain from opening new ones, and stop issuing new rules, guidance, or public comments.

In addition, Vought’s directive included the closure of the CFPB’s office for the week, with staff required to work from home.

“The spigot, long contributing to CFPB’s unaccountability, is now being turned off,” said Vought, who also serves as the director of the White House’s Office of Management and Budget. His appointment to head the CFPB marked a sharp shift in the agency’s operations, which had previously been overseen by Treasury Secretary Scott Bessent.

Criticism from Advocates

Vought’s actions have been met with strong criticism, particularly from those who support the CFPB’s role in protecting consumers from financial abuses. Dennis Kelleher, co-founder of the financial oversight advocacy group Better Markets, condemned Vought’s move, claiming that Trump was abandoning his own supporters by attempting to dismantle the agency.

“This latest attempt to kill the consumer bureau is another slap in the face for all Americans who depend on basic financial products and services, but especially for those in the multi-racial working-class coalition of Americans that helped elect President Trump,” Kelleher said in a February 9 statement.

CFPB’s Role and Recent Controversies

The CFPB has been at the center of several high-profile controversies, particularly concerning its involvement with the cryptocurrency industry. In 2023, the agency proposed overseeing crypto wallet providers, though it was later forced to backtrack after significant pressure and legal challenges. Despite this, tech trade groups filed a lawsuit against the CFPB in January 2024, accusing the agency of an “unlawful power grab” following its finalization of a controversial rule.

The agency is funded through budget requests to the Federal Reserve, in contrast to most other federal agencies, which rely on congressional appropriations. Critics argue that this funding structure has contributed to the CFPB’s perceived lack of accountability, while supporters contend that it allows the agency to operate independently and effectively oversee financial practices.

A Broader Effort to Reshape Government

Vought is also known for his involvement in Project 2025, an initiative led by a right-wing think tank aimed at reshaping the US government to grant more power to the president. His actions at the CFPB reflect broader conservative efforts to limit the agency’s influence and reduce its regulatory power.

Vought’s suspension of funding and oversight at the CFPB represents a significant shift in the agency’s operations, with implications for the future of consumer financial protection in the US. As the debate continues, the long-term impact of these changes remains to be seen