This past Thursday, the Consumer Financial Protection Bureau (CFPB) dismissed a significant lawsuit against Capital One and its parent company, Capital One Financial Corp, originally filed on January 14, 2025.
The suit, launched just days before President Donald Trump’s inauguration, accused Capital One of depriving millions of consumers of over $2 billion in savings account interest by keeping rates low on its 360 Savings accounts while not adequately disclosing a higher-yielding alternative, the 360 Performance Savings account.
The same day, the CFPB also withdrew lawsuits against Rocket Homes and Vanderbilt Mortgage and Finance, signaling a sharp pivot under the new Trump administration.
These cases, initiated under former CFPB Director Rohit Chopra—who was fired by Trump two weeks after Inauguration Day—represent a broader retreat from the agency’s aggressive consumer protection stance.
The Biden administration had positioned the CFPB as a robust defender of consumer rights, with Chopra leading high-profile enforcement actions.
In 2024 alone, the agency sued major banks like Bank of America, Wells Fargo, and Chase over alleged fraud vulnerabilities in the Zelle payment network, secured $95 million in refunds and fines from Navy Federal Credit Union for overdraft fees, and built on past successes like the 2022 $3.7 billion penalty against Wells Fargo for similar abuses.
Created in 2011 under the Dodd-Frank Act, the CFPB operated as an independent body funded through the Federal Reserve, allowing it to pursue its mission with significant autonomy and a 2025 budget of $823 million.
Under Biden, it reportedly returned over $21 billion to consumers since its inception, targeting predatory financial practices with vigor.
In contrast, the Trump administration has moved swiftly to curtail the CFPB’s scope.
Two weeks after shutting down the agency’s headquarters and halting most operations in early February 2025, a court filing on February 27 confirmed the dismissal of the Capital One case.
Posts on social media and news reports indicate further dismissals of six major cases, including those against Capital One, Rocket Homes, Vanderbilt, PHEAA, Heights Finance, and SoLo Funds, underscoring a deliberate rollback.
Trump’s nominee to permanently head the CFPB, Jonathan McKernan, a former FDIC board member, testified at his Senate confirmation hearing on Thursday, aligning with a federal court motion from February 24 stating the administration’s intent to maintain the CFPB but in a “streamlined” form.
This echoes Trump’s first term, when appointees like Mick Mulvaney slashed enforcement and requested a $0 budget, reflecting a deregulatory ethos favoring industry over consumer protections.
The U.S. hosts a patchwork of regulatory agencies—over 400 by some counts—overseeing finance, health, energy, and more.
Agencies like the CFPB, FDIC, SEC, and OCC often overlap, creating inefficiencies and a combined budgetary strain exceeding $70 billion annually.
Consolidating these into fewer, more focused entities could streamline oversight, reduce costs, and clarify jurisdiction, though it risks weakening specialized protections.
Critics (mostly Democrats including Senator Elizabeth Warren) argue the CFPB’s independence is vital to shield consumers from Wall Street excesses, a need unmet by prior fragmented regulation.
Trump’s approach, however, prioritizes efficiency and business interests, which might be a better overall strategy.