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The Consumer Financial Protection Bureau (CFPB) suddenly abandoned five of her own proceedings against the companies she had accused of victimization of customers on Thursday while the political and legal battle concerning the efforts of the Trump administration to radically reduce the agency raged.
The activity at the CFPB has been largely frozen thanks to an order of stopping of Trump officials, who seem to target the guard dog for potentially paralyzing cuts. Last week, that rejected Against the solo funds of the online lender, which raises concerns among the Democrats and the defenders of consumers that the administration could start to relax a large part of the agency’s legal file.
“There are certainly indications that they intend to reject a large number of cases, otherwise all cases,” said Eric Halperin, who has resigned from his post of CFPB application earlier this month after having served in the Biden administration. He noted that the agency had canceled its contracts with expert witnesses, which are essential to prove cases before the courts, while its work stoppage made it impossible to advance the proceedings.
CFPB lawyers did not explain their decision to delete cases in their legal files, and the agency did not respond to a comment request. The five cases were rejected with prejudice, which means that they could not be relaunched in the future.
The movements are in a way unprecedented for the agency. Until this month, the CFPB had never rejected one of its own prosecution without first of all obtained a kind of reparation for consumers, former officials said in Yahoo Finance. This occurred under the first Trump administration in 2018, when the director of the time-action Mick Mulvaney finished A continuation against the salary lender Golden Valley Lending. The case, however, was rejected without prejudice, which means that it could have, in theory, brought back.
Several of the costumes that the CFPB moved Thursday was deposited by former director Rohit Chopra after Trump’s electoral victory in November. The regulator rocket houses prosecution In December, alleging that he had illegally supplied real estate agents of the bribes to direct customers to his lender sister, Rocket Mortgage. At the beginning of January, he continued Berkshire Hathaway Vanderbilt Drong & Finance, a lender of mobile houses accused of illegally trapping customers in loans that they could not afford to pay.
The CFPB submitted its file against Capital One less than a week before the inauguration of Trump, affirm that the bank had deceived customers Of $ 2 billion by announcing a high -efficiency savings account which, in fact, paid very little interest.
Republicans and industrial groups had criticized The calendar of these proceedings as politically motivated, arguing that Chopra was trying to bring controversial cases at the last moment before the new administration could have a chance to replace it at the top of the agency. Many expected these combinations to be abandoned.
But all the cases that the agency has rejected was not deposited during the lame duck. Thursday, he decided to remove a Can be prosecuted Against the Pennsylvania Higher Education Assistance Agency, a student loan agent whom she accused of resorting to debts that had been returned to bankruptcy. He also abandoned a August 2023 case Against the finances of the heights, a lender with high cost, according to which the agency had abused borrowers.
In theory, the general prosecutors of certain states could try to deposit their own modified versions of dismissed proceedings, because they are statically authorized to apply the same consumer laws as the CFPB. But we do not know how much the workforce or resources would have to do so.
The decision to drop comes in the midst of a legal battle with high issues on the future of the CFPB. Last week, a federal judge temporarily blocked The acting director Russell Vought dismissed any additional staff, after a union representing the agency employees brought an action by affirming that he had planned to draw up to 95% of his workforce. In a file this week, Vought claimed He simply intended to execute a “more rationalized and effective office” capable of fulfilling his “legal responsibilities”.
Jonathan McKernan, nominated to be director of the Consumer Financial Protection Bureau, testifies during his confirmation audience of the banking, housing and urban business committee on Thursday, February 27, 2025. (Tom Williams / CQ-Roll Call, included via Getty Images)))))) ·Tom Williams via Getty Images
The CFPB, which was created within the framework of the 2010 Dodd-Frank law in response to the housing bust and the financial crisis, has long been a target for republican criticism, which accused it of using heavy tactics and stretching its legal authority. But it has become a particular focal point for Elon Musk and its Dogeus; The billionaire said he wanted to “delete” the CFPB.
Thursday, Democratic Senator Elizabeth Warren pushed Jonathan McKernan, Trump’s candidate to permanently direct the office, on If the agency would continue to apply the law under his direction.
“I am fully determined to follow the law fully and faithfully. This includes each of the laws,” he said.
Jordan Weissmann is a senior journalist at Yahoo Finance.
