Trump Team Set to Roll Back Chopra’s Credit Card, Banking Rules

The Consumer Financial Protection Bureau is likely to reverse Biden-era rules and significantly scale back its regulatory agenda after President-elect Donald Trump puts new leadership atop the agency.

Trump didn’t make financial regulation a central part of his successful campaign to retake the presidency, but Project 2025—the Heritage Foundation blueprint for a Republican return to the White House—called for eliminating the agency entirely.

That seems unlikely.

Instead, Trump is expected to fire the CFPB’s Biden-appointed director, Rohit Chopra, soon after taking office in January.

The CFPB will likely focus less on writing ambitious regulations and prescriptive guidance documents, and instead limit its work to policing consumer financial services markets through more traditional tools deployed by the Federal Trade Commission, said Joann Needleman, the leader of Clark Hill PLC’s financial services regulatory and compliance practice.

“They’re going to supervise and they’re going to enforce,” she said. “They’re really going to look for the baddest of the bad.”

That means most, but potentially not all, of the rules completed by Chopra, are set to be eliminated altogether or weakened under a new director, Needleman said.

The agency is unlikely to undertake any major new regulatory efforts or issue prescriptive guidance and other documents that Chopra relied on to reshape markets, she added.

Tackling Challenges

Nearly all of the CFPB’s rules completed under Chopra have been challenged in court.

Those include caps on credit card late fees, the collection of small business borrowers’ demographic data, medical debt collection restrictions, and applying some credit card protections to buy now, pay later products.

The pending litigation complicates matters somewhat for rolling those rules back.

“It is an awkward position for them to continue to defend rules that they no longer support,” said Elliott Stein, a Bloomberg Intelligence analyst.

Any repeal or significant changes to a final rule would have to be done through the notice-and-comment rulemaking process.

But the CFPB and the trade groups that filed lawsuits can agree to put litigation on hold while the agency reconsiders those rules, Stein said.

That happened the last time Trump had the chance to put his own director in place at the CFPB.

Richard Cordray, the CFPB’s first director and an Obama appointee, finished a long-gestating rule limiting payday lending in October 2017, shortly before he left the agency for an unsuccessful run for the Ohio governorship.

Mick Mulvaney, the CFPB’s acting director picked by Trump to replace Cordray, put implementation of the rule on hold while he weighed his options.

The Community Financial Services Association of America, a payday lending industry group, sued in April 2018 after waiting for action from the CFPB. The two sides agreed to put the litigation on hold in June of that year while the CFPB reconsidered the rule.

The payday lending group then reopened its litigation when the CFPB under Director Kathleen Kraninger, who succeeded Mulvaney, finalized a rule in 2020. The case ultimately went to the US Supreme Court after the US Court of Appeals for the Fifth Circuit used it to declare the CFPB’s independent funding through the Federal Reserve was unconstitutional.

The high court reversed the Fifth Circuit in May.

Existing enforcement actions can be prosecuted or settled on a case-by-case basis, Stein said.

Open Banking

One regulation that may survive is the CFPB’s open banking rule, which the agency finished in October. The rule allows customers to easily share their bank account and credit card data with financial technology applications and other banks.

The Bank Policy Institute, representing major US banks, joined with local plaintiffs in Kentucky announcing a suit to block the rule the day it was released.

But the rule didn’t face significant opposition from Republicans in Congress. Outgoing House Financial Services Committee Chairman Patrick McHenry (R-N.C.) said the rule was a “promising step forward to protect Americans’ financial data privacy.”

If the rule survives its brush with the courts, it might have a chance to take effect, Needleman said.

“There’s a lot of Republicans that want data privacy, open banking,” she said.

The CFPB under Chopra used guidance, circulars, and interpretive rules affecting buy now, pay later providers and debt collectors without going through the formal rulemaking process.

That’s unlikely to continue during the Trump administration, said Adam Rust, the director of financial services at the Consumer Federation of America.

“We’ve had a lot of things that weren’t necessarily durable that spoke to market protections,” he said. “And if those go away, what replaces them? And if it’s silence, doesn’t that leave consumers vulnerable?”