By Pam Martens and Russ Martens: February 4, 2025 ~
Scott Bessent, U.S. Treasury Secretary
Donald Trump has placed a man with no prior government experience, Scott Bessent, in charge of overseeing a sprawling network of federal agencies that are tasked with operating and protecting the financial system of the United States. What did Bessent do previously to qualify for this powerful position? He ran a hedge fund, Key Square Capital Management LLC, with 25 employees. But, more important to the transactional world of Donald Trump, Bessent gave $1.25 million to PACs supporting Trump and tens of thousands of dollars to state and national Republican parties and candidates.
Bessent was sworn in as U.S. Treasury Secretary on January 28. In that position, Bessent sits at the helm of a federal agency that includes the IRS; the Office of the Comptroller of the Currency (OCC), which regulates national banks; the Bureau of Engraving and Printing (of U.S. currency); the U.S. Mint; the Financial Crimes Enforcement Network (FinCEN), which is tasked with combating money laundering; and Bessent also Chairs the Financial Stability Oversight Council (F-SOC), which is made up of the heads of all major financial regulators.
In addition, legislation passed by Congress will put Bessent in charge of the slush fund known as the Exchange Stabilization Fund; and, thanks to stealthy legislation passed during the first Trump administration, the Treasury Secretary is now a permanent member of the National Security Council (NSC) as well.
And, if all that wasn’t enough, the Consumer Financial Protection Bureau (CFPB) announced yesterday that Trump had made Bessent the Acting Director of the CFPB, which protects the little guy from the predators on Wall Street and elsewhere. Republicans and bank lobbyists have been trying to kill the CFPB for decades.
Bessent has been in office less than 10 days and he has already begun making unsavory headlines by handing over access to highly confidential data in the U.S. Treasury’s $6 trillion payment system to people working for unelected tech billionaire Elon Musk.
Yesterday, Bloomberg Law reported that Bessent had effectively shut down much of the CFPB’s operations, writing as follows:
“Treasury Secretary Scott Bessent has shut down a wide variety of operations inside the Consumer Financial Protection Bureau in his new role as acting director.
“Bessent ordered the CFPB to stop all rulemaking, communications, litigation, and other activities, according to a Monday email to staff obtained by Bloomberg Law.”
Senator Elizabeth Warren, the Ranking Member of the Senate Banking Committee, expressed her outrage at Bessent’s hostile takeover of the CFPB with this statement yesterday:
“Secretary Bessent just sent a signal to giant corporations and big banks that it is open season to cheat, trick, and trap hard-working American families. Shutting down CFPB enforcement actions that are on the verge of delivering money into the pockets of working people is at odds with President Trump’s claim that he wants to lower costs for families – which he has done next to nothing on so far. This also follows Secretary Bessent giving Elon Musk and his cronies unprecedented access to government payment systems that deliver everything from Social Security checks to tax refunds. Secretary Bessent must reverse course, and if he doesn’t, I will use every tool at my disposal in the Banking Committee to hold him accountable – along with any company that lines its pockets at the expense of American taxpayers.”
Warren is a former Harvard Law professor. She has the knowledge and the connections to back up her warnings. She cited the following examples of enforcement actions that Bessent has put “on ice” at the CFPB:
“Capital One cheated millions of consumers out of $2 billion in interest by misleading them about their deposit accounts.
“Walmart & Branch illegally opened over one million bank accounts for delivery drivers and charged more than $10 million in junk fees.
“JP Morgan, Wells Fargo, and Bank of America allowed fraud to fester on the Zelle payment network, leading to hundreds of thousands of consumers losing nearly $1 billion.
“Cash App left users out to dry with a dead-end customer support number and intentionally shoddy fraud investigations designed to discourage seeking help.”
Of critical importance, Bloomberg Law also reported that Bessent’s email to CFPB staff ordered them to “suspend the effective dates” for all final rules that have not yet gone into effect. That would include two major triumphs for average Americans: the CFPB’s ban on including medical-related debt on consumer credit reports – which can negatively impact a consumer’s credit score and raise their borrowing costs – and the CFPB’s rule to cap overdraft fees at banks at $5 from the average of $35.
In December, the National Consumer Law Center (NCLC) warned that the overdraft cap rule was in danger of being overturned, despite the fact that it would save consumers approximately $5 billion a year. The NCLC has set up a web page where Americans can whip off a prepared strong message to their representatives in Congress, urging that this rule move forward.
Was it legal for Trump to put the head of one federal agency in charge of another federal agency?
The Federal Vacancies Reform Act of 1998 provides the statutory basis for Trump placing the Treasury Secretary in charge of the CFPB on an acting basis. When a vacancy occurs in a federal agency within the Executive Branch, where the position requires a Presidential appointment and Senate confirmation, the default procedure is to name the first deputy or first assistant to the Director as the Acting Director. The President does, however, have the ability to override that default procedure and appoint anyone as Acting Director who has already been appointed to another federal agency by the President and has been confirmed by the U.S. Senate. Alternately, the President could also, under the statute, fill the position with someone employed in the agency if they had worked there for 90 days or more in the prior year.
Despite these options, Trump selected a hedge fund guy with a vast array of responsibilities at Treasury to oversee the CFPB, and the first thing the hedge fund guy did was to shut down its ongoing enforcement actions, litigation and rule-making.
