CFPB Suspends Enforcement Lawsuits Against Capital One, Rocket Homes, and Others
The Consumer Financial Protection Bureau (CFPB) has decided to drop several legal actions against various companies, including Capital One and Rocket Homes. This change comes shortly after new leadership took charge and amid a chaotic period at the agency influenced by directives from the Trump administration. The CFPB filed notices on Thursday to officially dismiss lawsuits against these companies, along with others like Vanderbilt Mortgage and Finance, which is owned by Warren Buffett’s Berkshire Hathaway.
These lawsuits were originally initiated under the previous CFPB director, Rohit Chopra, who was dismissed from his position by President Trump just weeks ago. Since that time, the CFPB has experienced a significant upheaval, with orders from the White House to pause much of its operations. Additionally, there has been an effort to close the agency’s main office and terminate many of its employees.
Trump has defended his administration’s stance towards the CFPB, even labeling it as an organization meant to “destroy people.” However, supporters argue that the CFPB plays an essential role in overseeing the financial industry, helping to protect consumers from dishonest businesses.
As part of the leadership change, Trump has nominated Jonathan McKernan, a former member of the Federal Deposit Insurance Corporation, to take over as director of the CFPB. He appeared before a Senate committee for a hearing on Thursday.
The CFPB’s primary role is to create regulations and enforce laws that protect consumers against unfair, deceptive, or abusive practices by a variety of businesses, including banks, lenders, and credit agencies. Since it was established, the agency claims to have secured nearly $20 billion in relief for American consumers, which includes canceled debts, monetary compensation, and reduced loan amounts.
In recent months, the CFPB initiated actions against different financial institutions. For instance, it sued Capital One, accusing the company of misleading customers about its high-interest savings accounts and claiming that they cheated clients out of over $2 billion in interest payments. Another suit against Vanderbilt Mortgage alleged that the company pressured consumers into unaffordable loans for manufactured homes. Additionally, a lawsuit against Rocket Homes accused it of running a kickback scheme to direct potential borrowers away from competitors and toward its sister company, Rocket Mortgage.
However, now all of these cases are being dropped as announced on Thursday. Legal documents regarding the Rocket Homes case revealed that the CFPB is officially dismissing the action against all defendants, which means it cannot be refiled. The same language was used for the dismissals of the Capital One and Vanderbilt Mortgage lawsuits.
Rocket Homes expressed satisfaction with the dismissal, claiming it was pleased to see the truth revealed. The company characterized the lawsuit as an unfounded claim made by the former CFPB director for his own publicity before leaving office. Capital One also welcomed the decision, stating that it had firmly contested the allegations made against it. The CFPB’s actions have not gone unnoticed by other federal agencies, as the U.S. Securities and Exchange Commission (SEC) has also been scaling back enforcement actions in recent weeks concerning cryptocurrency platforms under the new administration. For instance, a high-profile lawsuit against the cryptocurrency exchange Binance is paused, and cases against Coinbase and Robinhood have been closed or dismissed.
