Investing.com -- President Trump has appointed Treasury Secretary Scott Bessent as the acting director of the Consumer Financial Protection Bureau (CFPB), a move which is expected to result in the halting of certain rulings, analysts said. These include the credit card late fee, bank overdraft, open banking, and credit bureau rules, as it is predicted that the agency will withdraw its defense of these.
The long-term implications of this appointment will depend on who Bessent selects as deputies for the agency and whether Trump eventually nominates a populist for the director’s position. The concern here is that a populist Republican could bring about significant changes, given Trump’s previous criticism of big banks and his call for a cap on credit card interest rates.
With Bessent at the helm, he has the power to suspend pending rulemakings and take control of existing litigation. This is why his appointment is seen as leading to the CFPB dropping its defense of the aforementioned rules, which were viewed as disadvantageous for financial firms and banks.
TD Cowen analyst Jaret Seiberg commented on the situation, "These picks are important as whomever Trump eventually nominates as director is likely to inherit this staff. We would expect these folks to be similar to those in power at the CFPB during Trump 1.0. If that is the case, it should reduce the risk to banks and other consumer financial companies as we would expect less focus on regulating fees and more focus on disclosure and timely enforcement action settlements."
Bessent is not expected to actively manage the CFPB, but rather, he is likely to appoint a series of senior deputies for the daily management of the regulator, Seiberg explained. The CFPB has not yet disclosed these appointments, but they are expected to be announced soon.
The selection of these deputies is crucial as they will most likely be inherited by whoever Trump eventually nominates as director. If these deputies are similar to those in power during Trump’s first term, this could reduce the risk to banks and other consumer financial companies, as there would likely be less focus on regulating fees and more focus on disclosure and timely enforcement action settlements.
Trump could leave Bessent in charge for an extended period or he could appoint another confirmed executive to serve as acting director. Notably, during his first term, Trump had his OMB director run the CFPB for more than 12 months. However, it is anticipated that he will eventually nominate his own CFPB director. The agency’s future actions, whether they align with those during Trump’s first term or pose a greater challenge for financial firms due to a more populist tilt, will be determined at that point.
This development is expected to impact credit card companies such as Visa (NYSE:V), Mastercard (NYSE:MA), American Express (NYSE:AXP), and Capital One (NYSE:COF).
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