Bank, credit union advisory councils disbanded by Trump

Bloomberg Creative

President Donald Trump issued an executive order Wednesday night that orders the disbanding of three bank and credit union advisory groups.

The executive order, "Commencing the Reduction of the Federal Bureaucracy," directs specified agencies to disband "elements of the Federal bureaucracy that the President has determined are unnecessary."

Specifically, the order directs the head of the Federal Deposit Insurance Corp. to terminate the Community Bank Advisory Council, which provides a forum for community bankers to regularly meet with FDIC board members and senior staff. 

And it calls for two Consumer Financial Protection Bureau boards to be terminated: the Academic Research Council and the Credit Union Advisory Council. 

James Akin, head of regulatory affairs at America's Credit Unions, said that the Credit Union Advisory Council provided a "critical forum" for credit unions to share their expertise with CFPB leadership to help them understand the real-world impacts on the 140 million Americans who rely on credit unions. 

"While credit union expertise was not always heeded, eliminating this council removes an essential channel for dialogue," Akin said in a statement. 

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In the absence of the council, credit unions "will increase our direct engagement with the CFPB. Our industry's mission, to prioritize people over profit, remains unchanged, and we will continue to push for policies that protect the cooperative financial system," he said. 

Former FDIC Chairman Martin J. Gruenberg said in a speech in October that the Community Bank Advisory Council provides a forum for regulators to deepen their understanding of financial institutions and to "exchange views on the future of the community bank business model." 

The order comes a day after Trump issued another executive order stipulating that independent regulatory agencies — including the FDIC and the non-monetary policy elements of the Federal Reserve — will now be subject to White House directives and must submit their rules to the Office of Management and Budget for review.

The banking industry is hoping that the Trump administration will rescind rules that were finalized in the past six months under former CFPB Director Rohit Chopra including the CFPB's $5 overdraft fee rule, $8 credit card late fee rule and 1033 open banking rule. 

The Office of Management and Budget is led by Russell Vought, who was named by Trump to a second job as acting CFPB director, an agency he has sought to defund. Last week, all CFPB employees were ordered by Vought to stop working and have been placed on administrative leave. Vought also ordered all CFPB employees "not make or approve filings or appearances by the Bureau in any litigation, other than to seek a pause in proceedings."