The news: The outcome of the US presidential election could shake up the Consumer Financial Protection Bureau (CFPB), leading to ripple effects across the payments industry.
- The CFPB under a potential Harris administration likely wouldn’t differ much—at least for the next two and half years as CFPB Director Rohit Chopra finishes out his term.
- But under a Trump administration, Chopra would likely be forced out, overhauling the agency and its priorities. In 2020, the US Supreme Court ruled the president is free to fire the director of the CFPB without cause.
Here’s what else could change if former President Donald Trump wins the election:
- Current rules could be dumped. The CFPB under a Trump administration could unwind recent rules made under Chopra—like the credit card late fee cap. It drew ire from banks, which the Republican party typically prefers to regulate less aggressively, and a Trump-appointed judge blocked the rule from going into effect. However, Trump’s proposed credit card interest rate cap could suggest a break from traditional Republican orthodoxy.
- CFPB autonomy could be weakened. Trump has said the CFPB is too powerful. During Trump’s first term, Director Richard Cordray resigned in 2017 after public disagreements with Trump. Interim Director Mick Mulvaney then sided against the CFPB in a lawsuit against lenders and was criticized for allegedly using his position to support large financial institutions instead of protecting consumers.
- New rules may be laxer toward FIs. Republicans tend to be more sympathetic to big businesses than Democrats, which could lead to less stringent rulemaking. But given that Trump also repeatedly takes issue with Wall Street, rules under his leadership remain a wild card.
Our take: Whichever candidate wins will have a large impact on payments and financial services as a whole. The CFPB has been very active the past year, releasing rules on buy now, pay later (BNPL), open banking, and early wage access programs, among other areas.
Of course, the future of the CFPB isn’t entirely based on the presidential election.
- Director appointees would need approval from Congress, for example. Cordray’s own confirmation was held up by Republicans in the Senate for nearly two years.
- And the next president’s court appointees will also determine how challenges to CFPB rules play out in court.
But all in all, a Trump victory would create more expansive changes across the CFPB and regulation over the payments industry and would likely lead to rules more supportive of industry.