Although many pundits speculated that President Trump would appoint Russell Vought as Acting Director once Vought is confirmed by the Senate to be Director of OMB, the CFPB reported today that, on January 31, Trump actually appointed Treasury Secretary Scott Bessent to be acting director. (The Federal Vacancies Reform Act authorizes the President to appoint as an acting director of a federal agency someone who has already been confirmed by the Senate for a position in another agency.)

Does this playbook sound familiar? This is what happened during Trump’s first term when Richard Cordray resigned early in Trump’s term and Mick Mulvaney, who had been confirmed by the Senate as Director of OMB, was appointed as Acting Director of the CFPB until the Senate confirmed Kathy Kraninger as the next Director of the CFPB.

Shortly after the announcement of Chopra’s firing, Professor Emeritus Hal S. Scott of Harvard Law School published an op-ed in the Wall Street Journal calling on President Trump to “shut the CFPB down.” Here is an excerpt from his op-ed:

“As I pointed out in these pages in May, the bureau is operating illegally. Congress mandated that it be funded by the earnings of the Federal Reserve, but there have been no earnings since the Fed began incurring losses in September 2022 due to rising interest rates. These losses currently total $219.6 billion. The CFPB’s defense, in 13 pending enforcement cases where defendants have raised the illegality of funding, is that “earnings” really means revenue, an absurd claim under accounting standards. It is telling that the Fed, the source of illegal funding, has been silent on the issue.

Since the bureau is operating illegally, the president can close it immediately by executive order. The order should declare that all work at the CFPB will stop, that all rules enacted since funding became illegal in September 2022 are void, and that no remaining rules will be enforced.”

Our blog and podcast show, Consumer Finance Monitor, have extensively covered the CFPB’s funding issue. This included a discussion I had with Professor Scott about his May, 2024 op-ed in The Wall Street Journal. With the change in Administrations, this seems like a propitious time to bring the CFPB funding issue to a head. While there would almost certainly be a legal challenge to President Trump issuing an executive order as urged by Professor Scott, there is no point in ignoring an issue of such paramount importance.

It should be noted that Professor Scott is not calling for the elimination of the CFPB altogether. He is calling for the cessation of its activities until Congress rectifies the CFPB’s funding issue, presumably by subjecting the CFPB to Congressional appropriations, just like the Federal Trade Commission. Bills to do just that have been introduced by Representative Andy Barr (R-KY) (the Taking Account of Bureaucrats’ Spending (TABS) Act, which actually has been reintroduced) and by Representative Keith Self (R-Tex) and Senator Ted Cruz (R-Tex) (the Defund the CFPB Act).