With less than a week until President-elect Trump's inauguration, the Trump transition team is expected to oust Consumer Financial Protection Bureau Director Rohit Chopra on Monday and quickly install an acting leader while it sorts out a permanent successor.
But who will lead the agency — and for how long — remains a mystery.
The challenge is particularly difficult given the slew of regulations issued by Chopra in the final days of the Biden administration and demands
"It can be a challenge to find the right person for that role," said Celia Winslow, executive vice president at the American Financial Services Association. "It's a little challenging to get someone when you're telling them to stop what the agency is doing."
Trump is expected to pick from a short list of Republicans who currently serve on the Federal Deposit Insurance Corp. or the Federal Trade Commission. Among the names being floated are Travis Hill, vice chairman of the FDIC, who is expected to lead that agency under Trump; Jonathan McKernan, an FDIC board member and Melissa Holyoak, an FTC commissioner.
There also is a possibility that Trump could pick among existing senior CFPB officials who were hired by former CFPB Director Kathy Kraninger. Some potential candidates have visited Mar-a-Lago, sources said, and at least one person turned down the job.
The Trump transition team may do what it did the last time around and pick a candidate to hold two jobs at once. In the first Trump administration, former
Under such a scenario, a Trump pick for acting director could serve at their agency and at the same time lead the CFPB.
"It would not be surprising if they followed the playbook from the last time around," said Richard Horn, co-managing partner of Garris Horn and a former senior counsel and special advisor at the CFPB.
Whoever is chosen is expected to begin to move immediately.
"If you have a new director coming in, you are going to put a pause on just about everything, because you're literally trying to get your arms around it," Kraninger, who is now president and CEO of the Florida Bankers Association, said recently.
What's next?
The Trump administration has sent an agency review team to the CFPB, which will be followed next week by the transition team. The team placed its first employees at the CFPB earlier this week, including Christopher Mufarrige, who previously worked as a senior CFPB advisor in the first Trump administration and is currently chief of staff and senior advisor to the FTC's Holyoak. The review team includes Todd Zywicki, a law professor at George Mason University's Antonin Scalia Law School, who led
After the inauguration, President Trump is expected to issue an executive order telling all agency heads to stop all rulemakings. He sent a similar order in 2017, as did President Biden in 2021. It is unclear if the order will cover independent agencies like the CFPB.
After the next acting CFPB director arrives at the agency, there will be an agenda to follow and dozens of important decisions to make regarding what comes next, said Kraninger.
"One of the great things that agencies do when they're preparing well for a transition — and I very much was involved in this at the CFPB, because I wanted to leave a legacy of this — you owe that new director what decisions are coming up in the next 30, 60, 90 days and the deadlines that are coming, whether it is litigation or implementation dates for rules. You have all of that laid out for you," said Kraninger.
The acting director is expected to freeze existing rules and enforcement actions. It is also likely that the new leader will put a halt to or start to rescind all nonbinding interpretive rules, guidance and proposals.
"The big question is what will remain and what will change?" said Eamonn K. Moran, a partner at Holland & Knight and a former CFPB attorney.
The banking industry has high hopes for Trump's CFPB. The Consumer Bankers Association is calling to extend the
But it is not a given that Trump's CFPB director will do what banks want. President-elect Trump ran a populist campaign, including calling for a
"There's no question there's going to be a new approach under this president, the only question is how dramatic will the changes be," said Scott Pearson, a partner and consumer finance leader at Manatt, Phelps & Phillips.
John Culhane, a partner at Ballard Spahr, said the Trump transition team is expected to impose "an immediate hiring freeze," which is supposed to result in roughly a 14% reduction in staff over the next year.
"All senior staff positions are all political positions and those individuals will be terminated," Culhane said.
Culhane added that Trump may revive an action he took in his first term, when he issued an executive order that stripped civil service protections from federal employees. Such an order would re-categorize thousands of civil servants to political appointees, enabling Trump to fire them.
"The exact tone [of the agency] will depend on the new director and the immediate actions taken initially," Culhane said on webinar discussing the Trump administration's regulatory and enforcement outlook. "All advisory guidance will be rescinded, some rulemakings will be paused and those that have been finalized will be reopened."
'Die on the vine'
One of the first actions Culhane expects to be taken by an acting director will be to rescind a policy that alleged discrimination is an "unfair" practice. Chopra announced
"All proposals not mandated by the Dodd-Frank Act will die on the vine," Culhane said.
Separately, a key priority for bankers is for Congress to repeal the small-business data collection rule, known as 1071 for its section in the Dodd-Frank Act. The American Bankers Association and CBA want the CFPB to also pause implementation of the small-business rule and to begin the process of formally withdrawing the rule, which may be difficult to do
Recent interpretive rules to
For example, past Democratic and Republican directors of the CFPB have been fighting for a decade over federal rules governing payday loans, which still have not gone into effect. Changing rules can take years and requires public notice-and-comment periods.
"For the 2017 payday rule, there was a consent injunction, a rulemaking that postponed the effective date, and a repeal rulemaking; and the two rulemakings began concurrently with two notices of proposed rules and then the effective date rule was finished before the repeal rulemaking," said David Silberman, a senior advisor at the Financial Health Network and a former associate director at the CFPB.
Changes at the CFPB will depend on the priorities and personality of who gets named to the job. Not everyone thinks the Trump administration will engage in a scorched-earth policy.
"Whoever comes in would take a thoughtful approach — everything doesn't necessarily get rolled back," said Winslow.
