Alert

CFPB Under Siege: Legal Challenges, Leadership Changes, Congressional Moves

February 18, 2025

As we have highlighted previously (here and here), the Consumer Financial Protection Bureau (CFPB) has continued to undergo significant changes under the second Trump Administration. However, various interested parties have started to fight back, leading to a flurry of lawsuits and challenges to some of Acting Director Russ Vought’s orders.

Here’s the latest on what’s happening at the CFPB.

A Pause in Employee Terminations

Late last week, a federal district court judge entered an order in ongoing litigation between CFPB employees and the Bureau temporarily prohibiting more layoffs at the agency pending further orders of the court. Also, District Court Judge Amy Berman Jackson entered an order prohibiting the Bureau from “deleting” or “removing” data held by the Bureau while also barring the agency from transferring money from its reserve funds for any purpose except operational reasons.

Challenge to Acting Director Vought’s Appointment

A number of consumer and employee groups have also sued the Bureau, challenging Acting Director Vought’s appointment. According to the plaintiffs, President Trump appointed Vought as acting director “without the advice and consent of the Senate” and without complying with the Federal Vacancies Reform Act, which, according to the plaintiffs, only permits temporary appointments without the Senate’s consent in cases where the previous holder of a Senate-confirmed seat dies, resigns, or is otherwise unable to perform office duties. According to the consumer groups, none of those exceptions exist here; therefore, Acting Director Vought’s appointment is unconstitutional.

New CFPB Employees Hostile to the Agency’s Mission

Following in the footsteps of the appointment of Acting Director Vought, a vocal critic of the Bureau he has been tasked (temporarily) with leading, the Trump administration has also installed two new leaders at the Bureau who also have a history of criticizing the agency. Jeffrey Clark was installed over the weekend as a senior advisor to Mark Paoletta, the CFPB’s new chief legal officer. Both Clark and Paoletta were members of the first Trump Administration as well as alumni of the Center for Renewing America, a conservative think-tank that has advocated for abolishing the agency and, if not possible without Congressional assistance, then limiting its scope and reach internally — something that the new acting heads of the Bureau have been actively pursuing since former Director Chopra’s termination.  

First Congressional Resolution Targeting CFPB Rule

The Bureau’s former priorities are also facing threats, as House Financial Services Committee Chairman French Hill and Senate Banking Committee Chairman Tim Scott introduced Congressional Review Act (CRA) resolutions to overturn the Bureau’s final rule capping overdraft fees at banks and credit unions. This is Congress’s first CRA targeting prior rules implemented by the Bureau during the Biden Administration but is most likely not the last.

The CRA resolution has industry approval and, importantly, only needs to pass by a majority vote in each chamber to pass. As the Republican party currently enjoys majorities in both the House and Senate, it’s a good bet that the CRA resolution seeking to overturn the overdraft rule will pass.

We will continue closely monitoring developments in the coming weeks and the implications for the industry, so stay tuned for more updates from McGlinchey.