Another day, another series of dismissals of lawsuits involving the Consumer Financial Protection Bureau. Read on to learn which enforcement actions and policies it has abandoned, news from Congress related to the CFPB’s funding, and whether the holdup of the confirmation of Jonathan McKernan to be the Bureau’s next director is a good thing or not.
CFPB Drops Appeal in UDAAP Case
The CFPB and the plaintiffs in a long-running dispute over changes to the Bureau’s Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) exam manual yesterday filed a joint stipulation dismissing the Bureau’s appeal before the Court of Appeals for the Fifth Circuit. This case, which stemmed from the bureau’s attempts to expand its definition of “unfairness” to include discrimination, saw the CFPB reach an agreement with plaintiffs including the American Bankers Association (ABA). The agreement marks the end of the appeal, with the CFPB pledging to focus its resources on consumer protection issues like supporting servicemembers and veterans. ABA President Rob Nichols expressed support for the bureau’s decision to abandon its broader interpretation of “unfairness” and hailed the dismissal as a recognition of the agency’s overreach.
Why Hasn’t the Senate Confirmed McKernan Yet?
Jonathan McKernan’s confirmation as the next director of the CFPB has been delayed in the Senate, despite bipartisan support and his confirmation for another position as FDIC director. One legal scholar is pondering whether the holdup in confirming McKernan is an attempt to give current Acting Director Russell Vought more time to complete his mission of dismantling the Bureau. While Republicans have signaled that McKernan will likely be confirmed, there is still speculation about whether McKernan will continue the current CFPB leadership’s policy direction or if he will shift away from the more aggressive consumer protection measures under Acting Director Russell Vought. This delay has raised questions, especially given the ongoing challenges within the agency, including massive layoffs and a shift in enforcement priorities under the Trump administration.
CFPB Announcement on Small Business Lending Rule Enforcement
The CFPB has announced it will not enforce its small business lending rule, which mandates financial institutions to collect and report data on lending to small businesses, particularly minority-owned businesses. “The Bureau will instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans,” it said in a statement. “The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses. Even absent resource constraints, the Bureau would deprioritize enforcement of this rule because of the unfairness of enforcing it against entities not protected by the court’s stay but similarly situated to parties that are protected by the stay.”
House Financial Services Committee Vote on CFPB Funding
The House Financial Services Committee yesterday voted to approve a measure that would significantly reduce the CFPB’s funding. The proposed bill slashes the bureau’s access to funds, lowering its percentage of the Federal Reserve’s operating expenses from 12% to 5%. This is part of a broader Republican effort to trim government spending, which includes significant cuts to consumer protection agencies. Rep. French Hill [R-Ark.], the committee’s chairman, emphasized that this is a necessary move to address the nation’s debt, while Democrats, including Rep. Maxine Waters [D-Calif.], have strongly opposed the cuts, arguing that the CFPB plays a crucial role in protecting consumers from financial abuse.
CFPB Drops Case Against ACE Cash Express
The CFPB has officially dropped its case against ACE Cash Express, a payday lender, which accused the company of deceptive marketing and charging illegal fees. The decision to dismiss the case with prejudice marks the end of the lawsuit, with the CFPB acknowledging the difficulty in proving its claims. This dismissal follows a pattern of dropped enforcement actions by the current administration, which has scaled back on pursuing consumer protection cases under its revised focus on other pressing threats to consumers, particularly servicemembers and veterans.
