Cfpb Withdraws Cases Against Companies Accused Of Cheating Millions Of Americans

The Trump administration’s feather-light regulatory touch was on full display again Thursday. 

The Consumer Financial Protection Bureau said it was dropping four cases against companies accused of illegally cheating millions of customers, including banking giant Capital One and a subsidiary of Warren Buffett’s Berkshire Hathaway. It could go down as the day that defined the next four years of corporate oversight, or lack thereof.

Ecstatic vs. Apoplectic

The cases that the CFPB dropped didn’t exactly involve harmless jaywalking claims. Last month, the agency accused Capital One of illegally misleading millions of consumers by claiming its flagship savings account had one of the “highest” interest rates available, only to freeze the rate when interest rate levels rose across the US. In the process, the CFPB alleged, the bank cheated millions of customers out of roughly $2 billion in interest payments.

Less than two weeks earlier, the CFPB had accused Vanderbilt, a home loan unit of Berkshire, of funneling borrowers into mortgages they couldn’t afford to buy houses from another Berkshire unit, Clayton Homes. Some borrowers, it said, were driven into bankruptcy. The other actions dropped Thursday included a lawsuit against a student loan provider accused of illegally collecting on loans that were discharged in bankruptcy and a suit against mortgage lender Rocket for allegedly giving illegal kickbacks to real estate brokerages in exchange for their sending business to one of its affiliates.

Companies formerly in the CFPB’s crosshairs could hardly contain their glee, of course, but watchdog groups were apoplectic:

• In a statement, Rocket said it was “proud to put this matter behind us” and Capital One said: “We welcome the CFPB’s decision to dismiss this action, which we strongly disputed.” Shares of Berkshire, Capital One, and Rocket Companies all rose following the dismissals.
• “The common thread in these cases are allegations that the companies routinely lie, cheat, and steal their way into their customers’ pocketbooks,” said Brady Williams, legal counsel for the non-profit regulatory advocacy group Better Markets. “The CFPB has been the only cop on the beat protecting consumers’ interests.”

What’s Next? The Trump administration has already fired dozens of CFPB staff, closed its D.C. offices and placed other agency workers on temporary leave. In court filings, the administration said it plans to run a streamlined CFPB. Trump’s nominee to run the agency, Jonathan McKernan, told the Senate Banking Committee on Thursday that the bureau had “pushed beyond the limits of statutory authority” under the Biden administration and “offended our basic notions of fairness and due process when it has regulated by enforcement.” So expect regulation without enforcement?

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