Chopra’s Last Stand: Illegal Regulatory Blitz Creates ‘Reputational Risk’ for CFPB

As Director Chopra’s tenure at the Consumer Financial Protection Bureau draws to a close, the agency has unleashed an unprecedented wave of unlawful rules and improper enforcement actions. This flurry of 11th-hour?rulemaking creates a massive policy and procedural backlog that the incoming administration will have to wade through — miring businesses with months, if not years, of uncertainty and forcing the Bureau to divert resources to address illegal rules rather than protect consumers.

BPI published a new report today examining the Bureau’s track record under the outgoing director and highlighting the numerous instances in which the Bureau has acted arbitrarily and exceeded its legal authority under his leadership.

By the Numbers

Over the last several weeks, the CFPB has issued:

• 34 press releases;
• 5 final rules (4 already facing legal challenges);
• 4 proposed rules, including a novel prohibition on certain contract clauses that represent a complete departure from the Bureau’s core mission; and
• 5 policy statements and circulars, reshaping interpretations of long-standing consumer finance laws.

Case Study: Zelle

One notable case is the CFPB’s enforcement action against Early Warning Services, the company behind Zelle. The Bureau accuses Zelle and several banks of inadequate fraud controls — despite 99.95% of Zelle transactions occurring without incident. The move highlights the Bureau’s controversial reliance on improper enforcement actions as a tool to advance policy goals, a hallmark of the current director’s tenure under which the CFPB has repeatedly sought to evade the proper rulemaking process to establish new requirements.

Is this the new normal for the CFPB?

The CFPB’s legacy under Chopra will likely hinge on the sheer volume and scope of its final actions. Yet, the critical question remains: Is this legacy built to last? Or have these fast and furious actions built on dubious legal theories set a dangerous precedent that undermines trust in the CFPB?

Government, like banking, relies on trust and transparency. While bold rhetoric and aggressive tactics may serve a personal agenda and grab headlines, to be enduring, rules and policy must be established lawfully and backed by data. The outgoing director’s parting blitz risks leaving the CFPB mired in legal uncertainty that will ultimately be bad for consumers, and bad for America.

1. Cybersecurity Needs Common Sense, Not Bureaucratic Overload

Cybersecurity risk is a national security threat across U.S. critical infrastructure. A recent attack by China on the nation’s telecom infrastructure demonstrates the urgency of protecting these sectors from infiltration. For communications, power and financial firms, the problem necessitates close collaboration with the law enforcement and intelligence communities, an army of trained specialists and significant investments in fortifying their systems. But it doesn’t require the intrusive reach of an extra layer of government oversight – the banking examination regime. Banks are unique among critical infrastructure industries in this extra scrutiny, which risks undermining, rather than supporting, their ability to respond to cyber threats.

• Auditors, not practitioners: Banking agency examiners generally lack hands-on experience running a complex security program or practical expertise in cybersecurity or technology. These cyber auditors focus on forcing cyber teams to document everything they do, then ensuring that they comply 100 percent of the time, rather than focusing on outcomes and security improvements.
• More harm than good: Bank cybersecurity exams now risk degrading, rather than enhancing, the industry’s ability to safeguard itself. The bank officers responsible for security report spending 30-50 percent of their time on compliance and examiner management; their teams spend 70 percent of their time on those functions. This causes burnout and staff turnover, and distracts from critical security duties.
• A better way: A better alternative to this regime is to empower a single agency to support banks’ efforts, rather than continuously examining their processes, employing a permanent staff with sufficient expertise and connectivity to the intelligence and national security communities. The Treasury Department, which already houses such an office, could play a larger role alongside its intelligence function.

2. Notable Highlights: Scott Bessent Nomination Hearing

Treasury Secretary nominee Scott Bessent testified this week at a nomination hearing before the Senate Finance Committee. While much of the hearing centered on?tariffs and taxes, here are some notable exchanges on bank regulation:

• Strength of the banking system: Responding to Senate Banking Chairman Tim Scott (R-SC), Bessent described the U.S. banking system as "well capitalized — perhaps overcapitalized," drawing on his background as a financial institutions analyst. He attributed the growth of the shadow banking system to "undue regulation" that has largely been to the detriment of regional and small banks.?Bessent committed to reviewing regulatory and supervisory conditions and likened the current bank regulatory regime to a pendulum that has swung too far.
• SARs: In response to Sen. Ben Ray Luján’s request to work with him on increasing transparency over Suspicious Activity Reports, Bessent said yes. He also mentioned digital assets: “I believe that we have to have a 2025 approach to … digital currencies and all branches of government.”
• Federal Reserve independence: In response to Sen. Catherine Cortez Masto (D-NV) asking about how much influence the President should have over the Fed, American Banker highlights that "Bessent expressed support for the central bank's independence, specifically with regard to monetary policy, though he did not say the same for bank regulatory matters."
• Credit card rates: When questioned about a Trump campaign proposal to cap credit card rates at 10 percent, Bessent said he would defer to the President on the matter.
• Central bank digital currencies: Responding to a question from Sen. Marsha Blackburn (R-TN), Bessent largely dismissed the idea of a CBDC in the U.S. stating, "a central bank digital currency is for countries [that] have no other investment alternatives. I view that many of these countries are doing it out of necessity, whereas the U.S., if you hold U.S. dollars, could hold very secure U.S. assets."
• Community Development Financial Institutions: Bessent signaled ongoing support for CDFIs in response to a question from Sen. Mark Warner (D-VA) and acknowledged the important role that CDFIs play in underserved communities.
• Return to office: Bessent wants Treasury employees back in the office. "I support a return to the office, which is against the [current] policy. I intend to be in the building every day that I'm in Washington."

3. Bank of England Delays Basel?Implementation to January 2027

The Bank of England’s Prudential Regulation Authority?has postponed the implementation of the new Basel capital rules by one year, pushing the start date to January 2027. The delay is attributed to ongoing uncertainty regarding the rule's adoption in the United States and considerations related to competitiveness and economic growth. Additionally, the PRA has paused data collection for Pillar 2 capital requirements and deferred deadlines for joining the Interim Capital Regime until further clarity is achieved. This marks the second delay announced by the PRA, following a six-month extension in September.

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