There is an unwritten tradition during transitions in the U.S. Presidency and Executive Branch for federal agencies to halt new rulemaking. Senate Banking Committee Chairman Tim Scott (R-SC) emphasized, “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.” In line with this, several financial agencies, including the Comptroller of the Currency, FDIC, NCUA, and Federal Reserve, have agreed to pause rulemaking ahead of the inauguration.
However, the Consumer Financial Protection Bureau (CFPB) has decided otherwise. Earlier this week, it announced plans to introduce a larger participant rule for nonbank entities offering personal loans to consumers. The CFPB argues there is an imbalance between banks and nonbanks in terms of regulation. While AFSA members providing personal loans are already subject to rigorous state-level supervision, federal oversight differs because banks offer deposits whereas state-licensed nonbanks do not.
Despite expectations that such a rule may not be finalized due to the impending change in administration, this announcement has heightened concerns about potential uncertainty and confusion stemming from the CFPB's approach to rulemaking. Critics suggest that the CFPB should align with other federal agencies by respecting administrative transitions.