By Douglas Gillison
(Reuters) – The U.S. Consumer Financial Protection Bureau on Thursday dropped a series of enforcement actions against financial services companies accused of wrongdoing under the prior administration, including a major case against Capital One for allegedly avoiding billions in interest payments.
President Donald Trump is moving rapidly to dismantle the CFPB, which he has said should be eliminated. The dismissals occurred while his nominee to head the CFPB, Jonathan McKernan, was on Capitol Hill testifying before the Senate in a confirmation hearing.
The agency has never before dismissed enforcement cases en masse.
The CFPB’s fate has looked grim since Trump took office last month and Thursday’s actions confirmed its disassembly would include a swift retrenchment of pending enforcement actions.
McKernan nevertheless told lawmakers he would continue to take consumer protection enforcement actions if confirmed.
The agency dropped the case against Capital One after accusing the bank last month of illegally cheating millions of customers out of more than $2 billion in interest payments.
It also on Thursday dismissed a lawsuit brought last year against the student loan servicer Pennsylvania Higher Education Assistance Agency (PHEAA), accused of illegally collecting on student loans discharged in bankruptcy.
The CFPB likewise dropped cases against the Berkshire Hathaway-owned Vanderbilt Mortgage and Finance, accused of steering borrowers toward unaffordable mortgages, Rocket Homes, which the agency in December charged with resorting to illegal kickbacks in a mortgage scheme, and Heights Finance, an installment lender officials had accused of illegal “loan churning” to generate hundreds of millions in fees and added costs.
Representatives for Capital One, Vanderbilt, PHEAA, Heights Finance and the CFPB did not immediately respond to requests for comment.
Rocket Homes said the case against it was based on faulty claims and never should have been brought.
“We are proud to put this matter behind us and remain focused on our mission to help everyone home,” the company said in a statement.
Last week, the CFPB dropped a case against online lender Solo Funds, which the agency had said had deceived borrowers about loan costs.
Republicans and industrial lobbies have long reviled and even sought to abolish the CFPB. After dropping the Solo Funds case, Russell Vought, the agency’s acting director, said on X that the CFPB’s case had nearly destroyed an innovative company.
However, Erin Witte, director of consumer protection at the Consumer Federation of America, a non-profit organization, said Thursday’s “unprecedented” mass dismissals showed the Trump administration was inviting corporations to abuse the public.
“We’re getting a very strong message here that if you’re a bank, if you’re a student loan servicer, and you’re violating the law, the CFPB is not only not going to pursue you, they’re going to let you out of your case scot-free,” she said.
Since taking office, Trump and his downsizing czar Elon Musk have vowed to destroy the CFPB. They have fired scores of staff, shut the agency’s Washington offices and moved to cancel its lease, while placing virtually all agency workers on temporary leave. Employee unions and consumer advocates have challenged these actions in court.
Despite Trump’s comments, the administration has said in court filings that it intends to operate a more streamlined and efficient CFPB, which agency advocates fear will mean retaining all but a skeleton crew unequal to the task of enforcing the law.
Pending the outcome of a legal motion filed this month by an employee union, the administration has agreed not to fire more personnel, alter or remove data or defund the agency.
In his confirmation testimony on Thursday, McKernan criticized the agency’s past enforcement actions as excessive but said if confirmed he would work to uphold the agency’s legal mandates.
“I’m fully committed to following the law fully and faithfully,” he said.
(Reporting by Douglas Gillison and Pete Schroeder; Editing by Alistair Bell, Marguerita Choy and Nia Williams)
