The U.S. Consumer Financial Protection Bureau (CFPB) made a striking move Thursday by dismissing five enforcement actions against financial services companies accused of various violations under the previous administration.
The dismissal of the cases has significantly diminished the CFPB's remaining legal actions against companies accused of abusive practices in the financial sector.
The move came as Jonathan McKernan, nominated to head the CFPB, testified before the Senate during his confirmation hearing, CNN reported
Dismissal of key cases
A major case against Capital One was among the dismissals, where the previous Biden administration had sued the bank for "cheating millions of consumers."
Regulators had accused Capital One of failing to pay over $2 billion in interest to holders of its high-interest savings accounts, Reuters reported.
In a filing Thursday, CFPB notified the U.S. District Court of its decision to voluntarily dismiss the lawsuit.
"We welcome the CFPB's decision to dismiss this action, which we strongly disputed," a spokesperson for Capital One said.
The CFPB also dropped a lawsuit filed last year against the Pennsylvania Higher Education Assistance Agency (PHEAA), which was accused of illegally collecting on student loans discharged through bankruptcy.
Additionally, the agency ended its case against Vanderbilt Mortgage and Finance, which had been accused of directing borrowers toward unaffordable mortgages, causing many families to struggle with their payments.
Vanderbilt is a division of Clayton Homes, the largest builder of manufactured homes in the United States, and a subsidiary of Warren Buffett's Berkshire Hathaway.
Other dismissed cases included those against Rocket Homes, which had been charged in December with engaging in illegal kickbacks in a mortgage scheme, and Heights Finance, which was accused of illegal "loan churning" to generate excessive fees and costs.
Responding to the dismissal, Rocket Homes stated the lawsuit was based on faulty claims.
"We are proud to put this matter behind us and remain focused on our mission to help everyone home," the company said, Reuters reported.
By the end of Thursday, court records revealed that fewer than 20 enforcement actions were still pending with the CFPB. Additionally, another six cases were either paused or likely to be paused.
Following these actions, shares of Capital One and Rocket Companies both rose by over 1%, despite a slight dip in the broader S&P 500.
Shift in regulatory approach
The decision to drop the cases signals a major shift in the CFPB's approach under the Trump administration, which has worked to undermine the agency's enforcement power in recent weeks.
Efforts led by officials from Elon Musk's Department of Government Efficiency (DOGE) have aimed to stop all work at the CFPB, including its initiatives to combat financial crime.
The sweeping dismissal followed the CFPB's recent cancellation of contracts with several expert witnesses hired for cases against companies accused of harming consumers.
"While it may not be a complete 'RIP' for the CFPB, its continued existence will likely only be a shell of its former self," Ed Mills, Washington policy analyst at Raymond James, wrote to clients Thursday.
Consumer advocacy groups condemn CFPB move
Erin Witte, the director of consumer protection at the Consumer Federation of America, criticized the decision, saying that the mass dismissals meant that the Trump administration was encouraging corporate exploitation of the public.
"The CFPB was created to be a watchdog for big banks, not a lapdog, and dismissing this case is a gift to Capital One," Witte stated.
Public Citizen, another consumer advocacy group, echoed Witte's concerns, warning that the lack of accountability for financial misconduct could potentially lead the U.S. down the same dangerous path that contributed to past financial crises.
