On February 3, the U.S. Consumer Financial Protection Bureau declined to defend regulations implemented during the Biden administration in court following the dismissal of its director by President Donald Trump.
In emergency filings submitted to the 5th U.S. Circuit Court of Appeals in New Orleans, just before hearings in two cases, the agency's attorneys stated that they were instructed not to participate in litigation, except to request a pause in proceedings.
One case involved a challenge by the CFPB against a Texas federal judge's ruling that the agency overstepped its authority in March 2022 by deciding to investigate banks and financial firms for potential discrimination.
In the second case, industry associations in the banking sector were appealing a judge's decision that the CFPB had the right to enforce a rule from March 2023 requiring lenders to collect demographic data on small business borrowers.
During a hearing in the discrimination case, a CFPB lawyer argued for a pause to allow the new leadership to review the ongoing litigation.
The court suggested both parties discuss whether oral arguments were still necessary.
It would be beneficial to expedite this process," remarked Circuit Judge Edith Jones, "recognizing the uncertainty of quick resolution.
Former CFPB director Rohit Chopra announced his resignation on Saturday, even though his term was not set to conclude until October 2026. Chopra faced significant opposition from Wall Street due to his vigorous approach to upholding consumer protection laws.
The Trump administration is anticipated to limit the agency's powers and potentially reverse recent regulations.
On Monday, the agency revealed that U.S. Treasury Secretary Scott Bessent had been appointed as the acting director of the CFPB.