In Times of Transition …
There has been a long-standing, albeit unwritten tradition in the midst of a transition with the U.S. Presidency and the Executive Branch, for federal agencies to suspend new rulemaking. As Senate Banking Committee Chairman Tim Scott (R-SC) noted, “It is paramount that President Trump can begin his administration on January 20th with a fresh slate to implement the economic agenda that the American people resoundingly voted for.” Other financial agencies have ceased rulemaking. The Comptroller of the Currency, the FDIC, NCUA, and Federal Reserve committed to pausing rulemaking before the upcoming inauguration. The CFPB, however, apparently did not get the memo.
Earlier this week, the Bureau announced that it will promulgate a larger participant rule for nonbank entities that provide personal loans to consumers. The Bureau’s reasoning is that there is an unlevel playing field between banks and nonbanks. AFSA members that offer personal loans are already highly supervised at the state level. A difference in supervision at the federal level exists because banks offer deposits, while state-licensed and -regulated nonbanks do not.
Never mind that, given the upcoming change in administration, it is unlikely that such a rule will be finalized. This latest announcement further reinforces the broader concerns many have voiced about the Bureau creating uncertainty and confusion with its approach to rulemaking. The CFPB should follow the lead of other federal agencies in deferring to the transition of administrations.
January 9th, 2025
