On the campaign trail, President-elect Donald Trump made his disdain for the 2010 Dodd-Frank financial reforms clear, leaving many to wonder what a Trump White House would mean for the Consumer Financial Protection Bureau — the financial services regulator created by the 2010 legislation. Now that pieces are beginning to fall into place for the Trump transition plan, the outlook for the CFPB does not appear very bright.

Will CFPB Be Dismantled?

Even before the CFPB launched in 2011, it’s been opposed by many in the financial industries, and by the lawmakers they back.

While the hard line against the CFPB has called for Congress to dismantle the agency entirely, that could prove too difficult as it would likely require legislation that would not survive a Democratic filibuster in the Senate.

Ed Mierzwinski, of the U.S. Public Interest Research Group recently told reporter Bob Sullivan that anti-CFPB lawmakers will probably try to get around a filibuster with smaller legislative efforts that chip away at the Bureau’s authority and its ability to enforce rules deemed too-restrictive on banks.

He points to recent attempts by these lawmakers to damage the CFPB via riders on appropriations bills that sought to “eliminate independent funding, convert it to a commission,” and delay enforcement of rules on payday lending and forced arbitration. Those efforts never bore any fruit because of the threat of presidential veto and the lack of numbers in the Senate to override that veto.

Bank-Backed Foes

One of the most vocal opponents of Dodd-Frank, and of the Bureau and its Director Richard Cordray, has been Rep. Jeb Hensarling (TX), Chairman of the House Financial Services Committee, and potential nominee for Treasury Secretary in the upcoming administration.

He’s also, one of the most bank-backed members of Congress. According to the Center for Responsive Politics, Hensarling was second only to Speaker of the House Paul Ryan among House members in receiving campaign contributions from commercial banks, and his PAC received more contributions from this sector than any other House member. In all, Hensarling’s campaign and his leadership PAC received around $1.9 million from the financial and real estate industries for the most recent election cycle, accounting for nearly two-thirds of all money raised for the Congressman.

Even if Hensarling is ultimately not named Treasury Secretary, his influence is already being felt. As the Wall Street Journal notes, much of the financial reform policy coming out of the president-elect’s team is virtually identical to legislation that Hensarling has previously proposed, some of which involves changes that would significantly blunt the Bureau’s fangs.

Changes At The Top

Arguably the most significant looming change to the CFPB comes not from the Trump camp or from anti-CFPB members of Congress, but from the courts.

Director Richard Cordray has been a controversial figure since President Obama used his recess appointment power to install the former Ohio attorney general as CFPB head more than four years ago. The move so upset some members of Congress that Hensarling and others refused to hear testimony from Cordray until he was vetted and approved by the legislature. Cordray was, after more skirmishes in the Senate, eventually confirmed for a five-year term in mid-2013.

In theory, he could remain as CFPB Director until that term runs out in 2018, but a recent federal appeals court ruling has called that authority into question.

In an effort to maintain the independence of the CFPB Director, the position is unique among federal regulatory agency heads. Agencies are usually headed by either a single director who can be removed at whim by the president, or by a multi-commissioner panel where it’s not as simple to remove an official.

At the CFPB, there is a single Director, but he can’t not be dismissed at will by the president, only for cause. The reasoning is that this shields the CFPB Director from pressures that regulated parties might try to put on the executive or legislative branches of the government.

While there is no law explicitly stating that a federal agency must be run by either a sole director that can be changed at the discretion of the White House or a multi-commissioner panel with term limits, a federal appeals court recently concluded that the CFPB’s peculiar structure is unconstitutional because it concentrates too much authority in one person who is not directly answerable to the president once in office.

If that ruling stands, it would mean that Cordray will likely be packing up his desk in late January. The law allows for his Deputy Director to assume the head position if Cordray exits before his term ends, but the White House will likely have a replacement in mind if they believe the appeals court ruling will survive.

People we’ve talked to in D.C. believe that the Trump administration would likely name an interim director to head up the Bureau while allies in Congress try to pass legislation that would restructure the CFPB leadership to a multi-member commission.

The other important change that anti-CFPB legislators have wanted is to make the CFPB more accountable to lawmakers by having its funding come through Congress rather than independently from the Federal Reserve. This revision to the Bureau’s structure has been proposed a number of times over the last five years, but has never been taken as a serious possibility until now.

Pending Plans

Bank-backed lawmakers have tried to de-fang the CFPB in recent years by forcing the Bureau to delay enforcement or redo research on controversial issues like payday lending and forced arbitration.

Some marquee regulations — like the long-awaited final rules on using arbitration in financial services — are still pending, and their future remains in doubt if Cordray leaves or is removed.

The Hill reports that the CEO of the Credit Union National Association wrote to Cordray earlier today, calling on the Bureau to press pause on many pending CFPB rules. Additionally, President-elect Trump has pledged to put a moratorium on new agency rulemakings once he takes office.

CUNA contends that this is the will of American voters, who “do not feel their voice is being heard by federal policymakers and they want that to change.”

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