The Consumer Financial Protection Bureau (CFPB) dropped five major pending legal hearings, including an important lawsuit against Capital One, earlier this year, marking a drawback for an agency that had taken strong action against financial companies suspected of conducting fraudulent activities during Joe Biden’s presidential term. The CFPB accused Capital One of manipulating clients into believing that they would be receiving higher rates of interest so that the company could avoid paying over $2 billion in interest to them. These allegations were denied by Capital One.
What was it for?
In its lawsuit against Capital One, the agency claimed that the company had engaged in a sort of bait-and-switch tactic by drawing clients with advertisements for its 360 performance savings and beneficial savings account while diverting many of them to 360 Savings, a product with the same name but paying as little as 0.30 percent yearly, even after the Federal Reserve increased the rate of interest above 5 percent.
Jonathan McKernan, Donald Trump’s choice to lead the consumer agency and a previous director of the Federal Deposit Insurance Corporation, was speaking at his scheduled confirmation interview before the Senate Banking Committee about these accusations.
McKernan served as a staff member in the US Senate, Treasury, Federal Housing Financial Agency, and briefly with the CFPB before joining the FDIC’s Board of Directors. In his prepared statement, he stated that he had practiced banking and customer financial regulation for nine years.
The Consumer Bureau
To track loans for consumers and provide safeguards in effect to stop the circumstances that caused the housing crisis from happening again, Congress established the Consumer Bureau in 2011. All of the bureau’s activity was almost stopped, but it could not be closed without authorization from Congress. The termination of the agency’s contract with its Washington headquarters was also a key element. Out of its 1,700 employees, about 200 were fired, and plans to terminate the other employees were announced. Numerous agreements with outside contractors that were necessary for the agency’s day-to-day operations were also terminated. Similar challenges around federal oversight and consumer impact have also emerged in the Education Department Income-driven Repayment Lawsuit, where halted programs disrupted critical financial relief for borrowers.
In a phone interview, former CFPB security chief Eric Halperin stated that the amount of terminations was new to the bureau’s history. Additionally, the CFPB withdrew its complaint against TransUnion, stating that the credit agency had broken a 2017 rule regarding the company’s outreach to customers about its credit services. The CFPB has made the decision not to file these claims again after the recent cases were rejected with presumption, eliminating the chance of reclaiming money for consumer compensation.
The current state of the CFPB
Russell Vought is the acting director of the CFPB at the moment. He is also the white house’s budget director and one of the creators of the 2025’s conservative project. The Trump administration has made it explicit that it disapproves of the CFPB and intends to either abolish it or significantly reduce its operations. Consumer organizations criticized the lawsuit’s conclusion.
Related Articles :
- Verizon Customer Data Lawsuit
- Amazon Driver Tips Lawsuit Settlement
- Allegations of Heavy Metal and Pesticide in Girl Scout Cookies: The Lawsuit
- Ford EcoBoost Engine Lawsuit: A Comprehensive Overview
Read related cases in our Consumer & Product Lawsuits section.
