The Consumer Financial Protection Bureau (CFPB) made headlines on Thursday by discontinuing five significant legal cases, including a notable lawsuit against Capital One. This decision marks a substantial shift for the agency, which has been known for its vigorous enforcement actions against financial institutions during the Biden administration.
Recently, the CFPB accused Capital One of misleading customers regarding potential interest earnings, leading to accusations that the bank failed to pay over $2 billion. Capital One has denied these allegations.
In addition to Capital One, the CFPB also dropped cases against several other entities, including Rocket Homes, the Pennsylvania Higher Education Assistance Agency, Vanderbilt Mortgage and Finance, and Heights Finance Holding Company.
The announcement of these dismissals coincided with a Senate Banking Committee hearing where Jonathan McKernan, the nominee for the CFPB directorship, faced questioning about the agency’s direction.
Strikingly, the CFPB has experienced significant upheaval in recent weeks, marked by staff layoffs and operational shutdowns, leading to employees being locked out of their headquarters in Washington, D.C.
During his testimony to the Senate, McKernan expressed that under the current administration, the CFPB had strayed from its core mission. “We need to refocus it on its mission,” he stated, advocating for a more efficient and accountable agency.
Senator Elizabeth Warren raised concerns regarding the timing of the dismissal, suggesting it was a strategic move to undermine McKernan during his nomination process, though she did not provide evidence to support her claim.
Senator Tina Smith also questioned McKernan about the pending litigation, expressing doubts about the agency’s leadership as the nomination progressed. McKernan assured that if confirmed, he would lead the bureau.
CFPB Faces Uncertain Future
Currently, the CFPB is under the leadership of acting director Russell Vought, a vocal critic of the agency, with the Trump administration signaling intentions to reduce the bureau’s scope or eliminate it altogether. Consumer advocacy groups have expressed dismay over the cessation of these critical legal actions.
Lauren Saunders, associate director of the National Consumer Law Center, criticized the decision, pointing out that voters are increasingly frustrated with escalating costs, remarking that the rollback of these legal efforts detracts from the bureau’s essential role in protecting consumers from corporate misconduct.
McKernan’s background includes previous roles at the FDIC, the Treasury, and a brief tenure at the CFPB, along with extensive legal experience in banking and consumer finance. His nomination has garnered support from various business groups.
