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The Consumer Financial Protection Bureau (CFPB) has suddenly dropped several legal cases against companies accused of harming consumers.
Recent court documents show that the CFPB will no longer pursue lawsuits against prominent firms such as Capital One and Rocket Homes. Just weeks ago, the bureau accused Capital One of “cheating” millions of customers out of billions in interest payments.
This decision reflects a shift in the regulatory approach under the Trump administration, which has sought to reduce the CFPB’s influence. Under new leadership, officials have been directed to stop various enforcement actions, including those related to financial crime.
Christopher Peterson, a law professor and former CFPB official, voiced concerns about this development. He stated, “The most important consumer financial watchdog is no longer on the beat. Major corporations can now operate without accountability for their actions.”
These changes come at a crucial time, as Jonathan McKernan, a nominee to lead the CFPB, faced questions from U.S. senators during a confirmation hearing. Senator Elizabeth Warren, a key architect of the CFPB, raised alarm over the timing of the lawsuit dismissals, suggesting it reflects a shift in control to external influences, including tech entrepreneur Elon Musk.
On Thursday, the CFPB formally announced the dismissal of its lawsuit against Capital One in a filing with the U.S. District Court. This marks a stark contrast from earlier in the year, when the CFPB, under a different administration, sued Capital One for allegedly withholding over $2 billion in interest payments from high-interest savings account holders.
Capital One welcomed the CFPB’s decision, maintaining that the claims were unfounded. The dismissal of these cases has drawn criticism from consumer advocates, who see it as a leniency toward large corporations. Erin Witte, a consumer protection director, described the move as a gift for Capital One.
Additionally, the CFPB dropped its case against Vanderbilt Mortgage and Finance, which had been accused of misleading borrowers. In January, the bureau alleged that Vanderbilt pushed borrowers into loans they couldn’t afford, contributing to financial struggles for many families.
Similarly, the CFPB dismissed claims against Rocket Homes and a group of real estate brokerages previously accused of engaging in an illegal kickback scheme. Rocket argued that the original lawsuit misrepresented their practices, and they are glad to have this issue resolved.
Shares of Capital One and Rocket Companies saw minor gains following the news, despite a slight decline in the overall stock market.
The CFPB also dropped its case against the Pennsylvania Higher Education Assistance Agency (PHEAA), known for its student loan services. Earlier, the agency had claimed that PHEAA harmed borrowers by not recognizing certain loans that could be discharged in bankruptcy. Many borrowers reportedly paid unnecessary debt as a result.
Analysts noted that the CFPB’s decision to dismiss these cases seems to signal a broader shift away from enforcement against major financial institutions. Ed Mills, an analyst at Raymond James, remarked that while the CFPB will continue to exist, it might not be as effective as it once was.
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