Acting Consumer Financial Protection Bureau Director Russell Vought said in a memo that the bureau is conducting an internal review of past guidance documents and plans to rescind any that the Trump administration deems unlawful.
On Friday, Vought sent an internal memo to the CFPB staff directing employees to cease issuing guidance documents that he claims have created rights and obligations that are unlawful and deprive the public of fair notice. The memo outlined principles for future guidance documents, including specific words that cannot be used.
Vought ordered the heads of eight CFPB offices — including enforcement, supervision, research and legal — to review past guidance documents in the next two weeks and to flag only those that conform to his principles set forth in the memo.
The heads of each division will provide an explanation of any guidance documents that should not be withdrawn to Mark Paoletta, the CFPB's chief legal officer, and Dan Shapiro, a CFPB advisor.
"All guidance documents not flagged for retention will be promptly rescinded, after review by Bureau's leadership," Vought wrote in the memo.
The memo reiterates Republican claims that former CFPB Director Rohit Chopra had "weaponized" the agency with guidance documents that went beyond what the law required including claiming that
Further, in the waning days of the Biden administration, Chopra issued a near-daily slew of actions — including providing
"For too long, this agency has engaged in weaponized practices that treat legal restrictions on its authorities as barriers to be overcome, rather than laws that we are oath-bound to respect," states the memo, which was reviewed by American Banker. "This weaponization occurs with particular force in context of the Bureau's use of sub-regulatory 'guidance.' "
In the memo Vought castigates CFPB employees, whom he calls by an unusual term: "components."
The memo states that the use of guidance to regulate "is unlawful and deprives the public a fair notice of what conduct is prohibited. The bureau will no longer engage in this practice," the memo states. "Effective immediately, Bureau components may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the bureau."
Some consumer finance lawyers have suggested that the CFPB under Vought wants to issue its own guidance but has been hamstrung because it abhors how guidance has been used under prior administrations, and under Chopra in particular.
Guidance can take the form of an advisory opinion or a change in policy that is not accompanied by a notice of proposed rulemaking that includes a process of soliciting and responding to comments from industry and the public.
The most egregious example of guidance came in 2022 when Chopra announced in a
The Vought memo outlined five principles that the CFPB will adhere to when issuing guidance documents, including stating clearly in a disclaimer that guidance is not legally binding, has no force or effect of law, and may be rescinded or modified at the bureau's discretion. The memo goes further by stating what words cannot be used if the language tells regulated firms that they have obligations beyond what the law or legislative rules state.
Vought implies that the CFPB under Chopra coerced financial firms to comply with guidance that was illegal.
In the third bullet, the memo states: "Guidance documents should not be used for the purpose of covering persons or entities outside the federal government, coercing persons or entities outside the federal government into taking any action or refraining from taking any action beyond what is required by the terms of applicable statute or regulation."
On the issue of specific language, the memo states that guidance documents should clearly identify the underlying law they are explaining. Vought states that guidance documents "should not use mandatory language, such as 'shall,' 'must,' 'required,' or 'requirement' to direct parties outside the federal government to refrain from taking action, except when restating — with citations to statutes, regulations or binding judicial precedent — clear mandates contained in a statute or regulation."
Finally, the CFPB states that guidance is a voluntary standard and that any recommended practices should clearly state that noncompliance will not, in and of itself, result in any enforcement action.
Vought, who also serves as director of the Office of Management and Budget, is an architect of Project 2025, the conservative blueprint for the Trump administration to reshape the federal government.
Several CFPB employees, who spoke on the condition of anonymity for fear of retribution, said that what was most striking about the memo was its accusatory tone, implying that the staff was responsible for the guidance when the orders came from the bureau's director.
