In a surprising turn of events, the Consumer Finance Protection Bureau (CFPB) has withdrawn multiple enforcement actions against prominent companies such as Capital One and Rocket Homes. This decision comes shortly after a change in leadership and internal upheaval at the agency triggered by directives from the previous Trump administration.
The CFPB recently dismissed lawsuits it had initiated against Capital One, Rocket Homes, Vanderbilt Mortgage and Finance (a subsidiary of Berkshire Hathaway owned by Warren Buffett), and others. These legal actions were initiated under the tenure of the agency’s former director, Rohit Chopra, who was removed by President Trump. Subsequently, the CFPB faced a period of uncertainty, with the White House issuing orders to halt most of its operations, leading to the closure of its headquarters and the termination of numerous staff.
President Trump has defended his administration’s stance against the CFPB, claiming that the agency was established to harm individuals. However, supporters of the CFPB emphasize its critical role in overseeing financial activities and safeguarding consumers from exploitative business practices.
The new nominee for the agency’s director position, Jonathan McKernan, underwent a Senate committee hearing on Thursday. The CFPB’s primary responsibility is to establish regulations and enforce actions to shield consumers from unfair, deceitful, and harmful practices across various industries. Over the years, the bureau has secured approximately $20 billion in financial relief for American consumers through debt cancellations, compensations, and reduced loans.
CFPB’s legal proceedings often involve entities like banks, mortgage providers, credit card companies, student loan services, payday lenders, credit bureaus, and debt collection agencies. Notably, prior to the recent changes, the CFPB had filed a lawsuit against Capital One for allegedly deceiving customers about its high-interest savings accounts. Similarly, it took action against Vanderbilt Mortgage for allegedly pushing individuals into unmanageable loans for manufactured homes and accused Rocket Homes of engaging in a kickback scheme to direct borrowers towards its services.
However, all these cases have been terminated with the latest developments. Statements from Rocket Homes and Capital One expressed satisfaction with the dismissals, with Rocket Homes denouncing the legal action as baseless and driven by personal motives. Capital One, on the other hand, welcomed the decision, highlighting its strong opposition to the allegations.
The CFPB’s move to drop these cases marks a significant shift in its enforcement strategy, raising questions about the future direction of the agency under new leadership.
Isn’t the only federal agency to signal a pullback on previous enforcement action under the new administration. The U.S. Securities and Exchange Commission, for example, has either closed or paused legal action against several cryptocurrency platforms in recent weeks, as the regulator tries to present itself as more crypto-friendly under Trump. Earlier this month, Binance and the SEC filed a joint motion to pause its high-profile lawsuit against the crypto exchange. And both Coinbase and Robinhood have said that cases against them have also been dismissed or closed, although the SEC declined to immediately comment further.
