Banking is one of America’s most tightly regulated industries, and confidential bank examinations carried out by independent federal regulators are a core guardrail for protecting the safety and soundness of the financial system.
Russell T. Vought, the White House budget director, is not a fan of how the Consumer Financial Protection Bureau, where he is the acting director, has carried out those exams.
On Friday, the bureau said it would now require its financial examiners to recite a “humility pledge” to companies before beginning a review.
“The upcoming supervision examination cycle is going to be fundamentally different from the prior ones,” the pledge begins. It then details a set of changes, including a more limited review scope and an agency commitment to “work collaboratively” with the businesses it oversees.
In a notice announcing the change, the bureau described its own supervision department as “the weaponized arm” of the agency under its Biden-era director and said its exams had been carried out with “thuggery.”
On Monday, the consumer bureau’s staff union fired back with a statement denouncing the pledge as “creepy” and “disrespectful.”
“Is this fan fiction I’m reading?” Cat Farman, a bureau employee and the president of the staff union, wrote. She added, “Instead of traumatizing C.F.P.B. workers with his role-play fantasies, Vought should resign so we can finally do our jobs protecting Americans from Wall Street fraud again.”
The new pledge is, for now, mostly symbolic. Mr. Vought halted nearly all work at the bureau shorty after his arrival in February, and bank examinations have not resumed. The agency’s hundreds of examiners have been told to spend their time closing out all open matters; they are currently barred from initiating new ones.
And Mr. Vought has refused to request money for the consumer bureau from the Federal Reserve, which funds its operations. The bureau warned in court filings that it would run out of operating cash early next year.
The Trump administration is pursuing a variety of changes to give it greater sway over how independent financial regulators, including the Fed, oversee Wall Street. President Trump’s appointees have slashed supervision staffing and curtailed the scope of agencies’ bank exams.
Financial companies often complain that the exams they are subjected to are too exacting and time-consuming.
Because exams are confidential, they can identify — and, ideally, stop — small issues that could otherwise mushroom. The consumer bureau’s examiners have forced banks and other lenders to return hundreds of millions of dollars to consumers for improper fees and worthless services, and helped uncover high-profile issues like Wells Fargo’s sham accounts scandal.
Stacy Cowley is a Times business reporter who writes about a broad array of topics related to consumer finance, including student debt, the banking industry and small business.
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