The Consumer Financial Protection Bureau (CFPB) has suddenly dropped five lawsuits against companies accused of harming customers. This change comes amid a heated debate about the future of the agency, particularly with the Trump administration aiming to scale it down significantly.
Among the dismissed cases are lawsuits against significant companies, including Capital One Financial, the ninth-largest bank in the U.S., and Rocket Homes, a major real estate referral site. The lawsuits also involved a prominent student loan servicer and two lenders focused on consumer loans.
Currently, the CFPB’s operations are stalled due to a stop-work order issued by Trump officials, who are targeting the agency for major cuts. Recently, the CFPB also dismissed a case against an online lender, SoLo Funds. This has raised alarms among Democrats and consumer rights advocates as it suggests a potential unraveling of the agency’s legal activities.
Eric Halperin, a former enforcement head at the CFPB, voiced concerns, stating there appear to be intentions to withdraw many cases, if not all. He pointed out that the agency has also canceled contracts with essential expert witnesses needed for court cases, which further complicates its ability to pursue legal action.
The CFPB did not provide an explanation for dropping these cases in their official filings, and all five lawsuits were dismissed in a way that prevents them from being refiled in the future. This approach is unusual for the agency. Until recently, it had only ever dismissed one other lawsuit without securing consumer relief in advance. That case was dropped back in 2018 during the first Trump administration.
The cases that were recently dropped include several filed by the previous CFPB director and were seen as attempts to tackle harmful practices in the financial sector. One notable example involves Rocket Homes, which was accused of giving kickbacks to real estate agents to funnel business to its affiliate, Rocket Mortgage.
While some of the dropped lawsuits were filed just before Trump took office, others were initiated on different timelines, including a recent lawsuit against the Pennsylvania Higher Education Assistance Agency, which was accused of improperly collecting on discharged debts.
State attorneys general may still have the option to pursue their own versions of these lawsuits, as they can also enforce consumer protection laws. However, it is uncertain how many states have the resources to take this on.
The decision to drop these suits unfolds against a backdrop of a legal battle over the CFPB’s future. Recently, a federal judge temporarily stopped the Acting Director from firing additional staff, after it was claimed that he aimed to let go of up to 95% of the agency’s workforce. The acting director argues he is merely trying to create a “more streamlined” bureau.
Critics on both sides of the aisle have questioned the CFPB’s effectiveness since its creation in response to the financial crisis of 2008. The agency has faced scrutiny from Republican critics who view it as overreaching and from financial interests like Elon Musk, who has expressed a desire to abolish it altogether.
During a recent Senate hearing, Democratic Senator Elizabeth Warren pressed Jonathan McKernan, Trump’s nominee to head the CFPB, about continuing the agency’s enforcement capabilities. McKernan assured that he would uphold the law diligently.
This ongoing saga reflects tensions between protecting consumer rights and the push for regulatory reduction in the financial sector.
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Source linkConsumer Financial Protection Bureau, Capital One Financial, student loan servicer, controversial cases, legal battle, Rohit Chopra
