But according to Jeff Ehrlich, a former CFPB deputy enforcement director, the pause in activities ordered by Bessent is not that big of a deal.
“This has happened with every change of administration. Rohit Chopra also paused all work, so what has happened this week is not unusual; it has happened with every transition that the bureau has gone through,” Ehrlich said.
According to Ehrlich, during a pause, the new administration typically comes in and reviews every open enforcement matter — both those in the investigation phase and those in litigation. Then the new administration decides which matters to continue pursuing and which to end.
“I expect the new administration to follow this same approach,” he said.
Francis X. Riley, a partner at Saul Ewing LLP, who specializes in the Real Estate Settlement Procedures Act (RESPA) that is enforced by the CFPB, also does not believe the pause will have much of an impact.
“Court rules and scheduling orders affecting CFPB enforcement actions are not frozen and, therefore, the litigation will proceed as required by those rules or specific scheduling orders,” Riley wrote in an email.
Riley also noted that the Trump administration, despite its outward disdain for the CFPB, cannot dissolve the bureau. An act of Congress would be needed to vacate the Consumer Financial Protection Act (CFPA) under the Dodd-Frank Act — something that few in the enforcement space expect to happen. But this does not mean that the Trump administration can’t seek to weaken the CFPB.
“The acting director can take action to cause the CFPB to be a wilting flower, such as: no or limited supervisory activities; no or limited investigations and related enforcement actions; no interaction with the Department of Justice or the Federal Trade Commission; no interaction with state attorneys general,” Riley wrote.
“Also, given that the acting director is the confirmed Treasury Secretary, he could stop or severely limit the CFPB’s funding either generally or for specific work. He could determine that the CFPB is supposed to get its funding from the Federal Reserve only from the Fed’s profit and since the Fed has not earned a profit in recent years and is likely not to earn any this year, there is no funds to provide to the CFPB.”
Marx Sterbcow, the managing partner of Sterbcow Law Group, agrees with Riley that the Trump administration lacks the congressional votes to get rid of the CFPB. But he also believes it will look for ways to weaken the bureau. According to Sterbcow, there are pros and cons to a weaker CFPB.
“Some of the good is that the fair lending enforcement and other overreach from the CFPB will end, but that being said, you do need an agency like the bureau. It creates stability, uniformity, and it creates a model for which companies need to operate within,” Sterbcow said.
If the CFPB does find itself being shut down or severely losing power through one of the avenues Riley outlined, Sterbcow fears companies in a variety of industries — not just housing — will take it as a sign to do whatever they want.
“When the Zillow enforcement action was dropped by the CFPB in 2018, it created the perception that it was the wild, wild west again, and that there was no regulator,” Sterbcow said. “I worry that will come back into play and people will start cutting their compliance departments, and a lot of bad behavior comes back into vogue. That would not be good for consumers and it would not be good for the industry — it just creates a really unhealthy marketplace.”
The office of Sen. Elizabeth Warren (D-Mass.) had some more pointed thoughts on the matter.
“Secretary Bessent just sent a signal to giant corporations and big banks that it is open season to cheat, trick, and trap hard-working American families. Shutting down CFPB enforcement actions that are on the verge of delivering money into the pockets of working people is at odds with President Trump’s claim that he wants to lower costs for families — which he has done next to nothing on so far,” Warren’s office wrote in an emailed statement to HousingWire.
“This also follows Secretary Bessent giving Elon Musk and his cronies unprecedented access to government payment systems that deliver everything from Social Security checks to tax refunds. Secretary Bessent must reverse course, and if he doesn’t, I will use every tool at my disposal in the Banking Committee to hold him accountable — along with any company that lines its pockets at the expense of American taxpayers.”
If fewer regulatory actions end up coming out of the CFPB, enforcement experts believe that state attorneys general or other state regulators may step up to fill the regulatory void.
“The states have enforcement authority under the CFPA to address any perceived or actual violations,” Riley wrote.
Additionally, many states have their own version of RESPA, which they could choose to enforce. But if Dodd-Frank was repealed, all the rules it promulgated and enforced would be null and void, greatly loosening the restrictions faced by those in a variety of industries —including title and settlement services, mortgage origination, property and casualty insurance, and home warranty.
