The CFPB: Setting New Priorities

If you haven’t already seen the coverage from various national news organizations, there is an April 16th internal memo that was circulated to CFPB staff which changes the direction of the Bureau’s supervision and enforcement for the remainder of the year. The memo notes that the Bureau intends to remedy abuses and threats suffered by consumers with a focus on harm to members of the military, their families, and veterans, and will seek maximum penalties for these consumer victims. 

The internal memo also notes that the Bureau is slashing its supervision of nonbank institutions and is pivoting its focus back to the largest banks and depository institutions. As you know, the CFPB has consumer protection supervisory authority over banks, thrifts, and credit unions with assets over $10 billion, as well as their affiliates; with respect to that supervision, the CFPB’s exam posture for 2025 will be to coordinate exams and exam timing with other primary federal regulators, with the Bureau intending to minimize duplicative enforcement “where another federal regulator is currently engaged in or has concluded enforcement.”  The goal here is to reduce supervisory exams by 50% and to correspondingly reduce the price of running businesses, as well as consumer prices. 

Fraud is also a huge concern for the CFPB with the memo indicating that the Bureau’s focus will be actions of actual fraud against consumers and that it intends to seek maximum penalties for those victims:   

“The Bureau will focus on actual fraud against consumers, where there are identifiable victims with material and measurable consumer damages as opposed to matters based on the Bureau’s perception that consumers made “wrong” choices.”   

The areas of priorities are:  

a.    Mortgages (getting the highest priority); 
b.    FCRA/Reg V related to data furnishing violations; 
c.    FDCPA/Reg F relating to consumer contracts/debts; 
d.    Various fraudulent overcharges, fees; and  
e.    Inadequate controls to protect consumer information resulting in actual loss to consumers.  

In its enforcement of fair lending laws, the memo specifically states: 

“The Bureau will not engage in or facilitate unconstitutional racial classification or discrimination in its enforcement of fair lending law: 

a.    The Bureau will not engage in redlining or bias assessment supervisions, or enforcement based solely on statistical evidence and/or stray remarks that may be susceptible to adverse inferences. 
b.    The Bureau will pursue only matters with proven actual intentional racial discrimination and actual identified victims.  Such matters shall be brought to the leadership’s attention and maximum penalties will be sought.” 

The internal memo notes that the CFPB will no longer pursue legal theories, focusing on areas clearly within its statutory authority.  The memo further indicates that certain areas of supervision are being “deprioritized” to include: (i) financial services for “justice involved” individuals (such as prisoners); (ii) medical debt; (iii) peer-to-peer platforms and lending; (iv) student loans; (v) remittances; (vi) consumer data; and (vii) digital payments. 

Also of importance is that the memo indicates that all previously issued enforcement and supervision documents indicating the Bureau’s priorities have been rescinded.

From a compliance perspective, the eleventh point from the memo indicates that, 

“The Bureau’s primary consumer enforcement tools are its disclosure statutes.  [Nor will the] Bureau … engage in attempts to create price controls.” 

So, credit unions should continue their efforts to ensure compliance with the Bureau’s consumer disclosure requirements. 

America’s Credit Unions will continue to update you when more credit union specific information is made available. 

You’ve probably also heard that the CFPB recently continued with its reduction-in-force plans, with about 90% of the Bureau’s staff receiving lay-off notices on Thursday, April 17th. That would leave the Bureau with approximately 200 employees to carry out its priorities for focusing on tangible harms to consumers. 

In a declaration filed in U.S. District Court on Friday, CFPB chief legal officer Mark Paoletta wrote: “An approximately 200 person agency allows the Bureau to fulfill its statutory duties and better aligns with the new leadership's priorities and management philosophy."  

A federal judge has temporarily barred the reduction-in-force from happening. For more information about CFPB’s reduction in force, click here.