Consumer advocates on Thursday slammed the Trump administration for dropping various enforcement actions against companies accused of activities that include ripping off savings account holders, illegally collecting on student loans, and engaging in an unlawful mortgage broker kickback scheme.
The Consumer Financial Protection Bureau's notices of voluntary dismissal came as the U.S. Senate Committee on Banking, Housing, and Urban Affairs
held a hearing for Jonathan McKernan, President Donald Trump's pick to lead the CFPB—which Accountable.US executive director Tony Carrk has called "a gift to big banks and special interests."
"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."
While the former Federal Deposit Insurance Corporation board member awaits confirmation from the GOP-controlled Senate, Trump and Russell Vought, the CFPB's temporary leader, have wasted no time trying to
gut the agency and undo the work of its former director, Rohit Chopra, who oversaw cases against the following companies:
- Capital One, accused of cheating millions of banking customers out of more than $2 billion in interest;
- Heights Finance, accused of loan-churning practices that harvested hundreds of millions of dollars in costs and fees;
- Pennsylvania Higher Education Assistance Agency (PHEAA), accused of collecting on student loans discharged in
bankruptcy and sending false information to credit
reporting companies;
- Rocket Homes, accused of providing incentives to real estate agents and brokers who steered homebuyers toward its loans; and
- Vanderbilt Mortgage & Finance, accused of trapping people in risky loans for manufactured homes.
Court paperwork "in the Rocket Homes case notes that the 'Consumer Financial Protection Bureau dismisses this action, with prejudice, against all defendants,'"
according toThe Associated Press. "Dismissing a case without prejudice means that it cannot be refiled. Similar wording was used in the dismissals of the CFPB's Capital One and Vanderbilt Mortgage suits."
Those decisions came after the CFPB last week
dropped a case against SoLo Funds, which the agency accused of misleading borrowers about loan costs. Vought had then teased further action, saying on social media Sunday that "shockingly, the CFPB tried to destroy this company, SoLo, which incurred millions in legal fees and had to lay off 30% of its workforce. It was wrong and we dismissed the case. More to come but the weaponization of 'consumer protection' must end."
Meanwhile, critics like Christine Chen Zinner, consumer policy counsel at Americans for Financial Reform, are framing the CFPB's dismissals as a betrayal of the agency's mission.
"The old CFPB stood ready to protect consumers and wrestle back the ill-gotten gains of big banks like Capital One," Chen Zinner
said Thursday. "With this decision, the Trump-appointed leadership is letting Capital One steal $2 billion from its depositors, another example of this administration standing up for Wall Street at the expense of everyday people who deserve the CFPB's protection."
Erin Witte, director of consumer protection at the Consumer Federation of America, also
released a statement focused on the bank case.
"The CFPB was created to be a watchdog for big banks, not a lapdog, and dismissing this case is a gift to Capital One," said Witte. "$2 billion is a drop in the bucket for Capital One–less than half a percent of its total assets—but returning this money would make a huge difference to the hardworking Americans who trusted Capital One to safeguard their savings and were kept in the dark about how to earn more."
Witte also described the full list of dismissals as "unprecedented," and
toldReuters, "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."
Accountable.US
highlighted that "the news stands in stark and alarming contrast to McKernan's remarks... to senators, promising to review all existing CFPB lawsuits before making any decisions around dropping litigation."
Student Borrower Protection Center executive director Mike Pierce said in a statement about the PHEAA case that "Russ Vought and Donald Trump sided with a lawless and corrupt student loan company at the expense of borrowers across the country—another sign that powerful financial interests are driving the capture and demolition of the federal consumer watchdog."
"This is a slap in the face to students, student loan borrowers, and working people everywhere," Pierce continued. "PHEAA lied to some of the poorest and most vulnerable Americans, then illegally hounded them for debt that they did not owe, all to make a buck. And today, cowardly political sycophants backed down on the federal government’s only effort to hold PHEAA accountable."
"Of course, like all fascist toadies, Russ Vought will rightly be forgotten by history and sink into well-deserved irrelevance. But until then, law enforcement at every level of government must rush in to fill the void left by a federal consumer protection agency that now stands only to serve billionaires and big corporations," he added. "Remember: these people prey on those in need because they are motivated only by the desire to exercise power, and they are motivated to do so because they are cowards. It is everyone's job to remind Vought and his cronies of their powers' limits, and to remind the world of their cowardice."
Lauren Saunders, associate director of the National Consumer Law Center, also
directed some blame at billionaire Elon Musk, the head of Trump's so-called Department of Government Efficiency, which is leading the administration's efforts to slash the federal workforce and spending.
"The Trump administration and Elon Musk are showing us exactly what it means not to have ordinary people protected by a strong Consumer Financial Protection Bureau—they are dismissing enforcement cases that sought to return billions to working families harmed by corporations accused of egregious conduct that violated the law," said Saunders. "On top of the stop-work order and firing of CFPB workers doing their jobs, this sends a dangerous message to corporate America that financial fraud and abuse will go unchecked. We must preserve a strong, independent, and functional CFPB to stand up to corporate bullies."
Sen. Elizabeth Warren (D-Mass.), a former bankruptcy professor, is the mastermind behind the CFPB. She is also the ranking member of the panel which McKernan appeared before on Thursday. The American Prospect executive editor David Dayen reported that the senator informed the nominee about the dismissals during the hearing.
"Literally while you've been sitting here and you've been talking about the importance of following the law, we get the news that the CFPB is dropping lawsuits against companies that are cheating American families, or alleged to be cheating American families," Warren said. "It seems to me the timing of that announcement is designed to embarrass you and to show exactly who is in charge of this agency right now: Elon Musk and his little band of hackers."
