CFPB Ends Legal Actions Against Capital One, Others

The Consumer Financial Protection Bureau (CFPB) has recently withdrawn various enforcement actions against financial giants such as Capital One and Rocket Homes, amidst the agency’s leadership transition and confusion caused by directives from the Trump administration.

Noticeable adjustments in the agency’s approach came to light last Thursday when the CFPB submitted voluntary dismissals, effectively dropping lawsuits against Capital One, Rocket Homes, and Vanderbilt Mortgage and Finance, a company under Warren Buffett’s Berkshire Hathaway, among others.

These cases were previously filed by the CFPB during the tenure of its former director, Rohit Chopra, who was dismissed from his position by President Donald Trump mere weeks ago. Since then, the agency has reportedly experienced significant upheaval as the White House instructed it to significantly curtail its operations, even going as far as closing its headquarters and initiating widespread layoffs among its staff.

President Trump has defended his administration’s aggressive actions against the CFPB, claiming the agency was “set up to destroy people.” Proponents of the bureau, however, argue that its role is pivotal in enforcing oversight and protecting consumers from predatory business practices.

Following the leadership change, Trump nominated Jonathan McKernan, a former member of the Federal Deposit Insurance Corporation board, as the new director of the CFPB, who faced a Senate hearing on Thursday.

A core responsibility of the CFPB is the formulation of rules and enforcement actions designed to shield consumers from unfair, deceptive, or abusive practices by a spectrum of businesses and other institutions. Since its establishment, the bureau claims to have secured nearly $20 billion in financial relief for U.S. consumers, achieved through canceled debts, compensation, and reduced loans left by these practices.

The bureau typically pursues legal action against entities such as banks, mortgage servicers, credit card companies, student loan processors, payday lenders, money transfer providers, credit reporting agencies, and debt collectors.

Last month, before Trump’s presidency commenced, the CFPB brought a legal challenge against Capital One, alleging the bank misled consumers about its high-interest savings account offerings, “cheating” customers out of over $2 billion in lost interest payments. Another lawsuit filed on January 6 accused Vanderbilt Mortgage of encouraging consumers to take loans that were unaffordable to purchase manufactured homes. In December, the CFPB also took issue with Rocket Homes, accusing it of orchestrating a “kickback scheme” to illegally direct potential borrowers towards Rocket Mortgage, diverting them from competitors.

However, these cases will no longer proceed as of Thursday, as indicated by court documents in the Rocket Homes case, stating that the “Consumer Financial Protection Bureau dismisses this action, with prejudice, against all Defendants.” Dismissing a case with prejudice means it cannot be reopened.

Rocket Homes responded positively to the dismissal, emphasizing it was “good to see the truth come to light,” describing the complaint as an unwarranted pursuit by former CFPB director Chopra to gain publicity.

Capital One expressed relief over the dismissal as well, maintaining its strong opposition to the bureau’s claims. Vanderbilt Mortgage has yet to issue a comment.

The CFPB is not alone in stepping back from enforcement under the new administration, as the U.S. Securities and Exchange Commission (SEC) has similarly stopped or paused legal actions, notably against several cryptocurrency platforms as it seeks to adopt a friendlier stance toward cryptocurrency under Trump.

Earlier this month, both the SEC and Binance agreed to pause their ongoing, high-profile legal battle while entities like Coinbase and Robinhood have stated that the SEC’s cases against them have been dismissed or concluded, though the agency did not comment further.