The Consumer Financial Protection Bureau is turning into the Corporate Financial Protection Bureau. President Trump’s C.F.P.B. has not only ceased to pursue its mandate; it has taken the unprecedented step of unwinding prior victories — even in cases brought during Mr. Trump’s first term.
These moves, accompanied by the blatant corruption being encouraged by this administration, send a clear message: Lawbreaking is tolerated, and the interests of banks, tech companies and the richest financial companies in the world are paramount.
Thanks to Elon Musk’s foot soldiers from the so-called Department of Government Efficiency, the bureau’s Washington offices have gone dark. While the courts have so far thwarted efforts to lay off nearly all its employees, a vast majority have been sent home in the interim, and many functions of the C.F.P.B., the only federal consumer financial law enforcement agency, have shut down. As of March, the agency’s consumer complaint process — which helps Americans resolve problems with their banks, mortgage lenders and student loan servicers — was backlogged with more than 16,000 consumer complaints.
There is one part of the organization that is functioning: the fief consisting of the C.F.P.B.’s acting director, Russell Vought, and chief legal officer, Mark Paoletta, its top two Trump appointees. Now the agency is not only handing out what amounts to corporate pardons to the likes of big banks and massive mortgage lenders, but it is also working to reopen already settled cases. Disturbingly, in some cases, the agency is trying to pull back or has pulled back redress and penalties that would have otherwise gone to Americans.
Last week the Trump administration, without explanation, quietly terminated a settlement with Toyota Motor Credit. In 2023 the company agreed to pay $60 million, including $48 million in consumer compensation, for preventing car buyers from canceling unwanted products. That effort included sending over 100,000 of them to a Kafkaesque hotline designed to thwart them from canceling, refunding the wrong amounts and tarnishing their credit reports with false information. A few days later, the agency also reduced the penalties faced by Wise, a payment company that was found to have deceived its customers, to about $45,000 from over $2 million.
Victories stemming from cases filed in Mr. Trump’s first term are also being gutted. In a suit that was filed and litigated in 2017 and continued under President Joe Biden, the C.F.P.B. won a settlement from the National Collegiate Student Loan Trusts, which was charged with collecting on student loans it couldn’t prove it owned. When the company’s investors objected to the settlement, Mr. Trump’s second-term C.F.P.B. initially defended it, only to inexplicably dismiss the case, settlement included, in April. The agency has also asked a court to undo a settlement already paid by a mortgage company that was charged with discriminating against Black borrowers — a case also initiated in the first Trump administration.
In virtually all cases, it will not be possible for a court to undo the agency’s actions. That means people may never be compensated for the harm they suffered. The Trump administration’s role in allowing companies to walk away from settlements they already agreed to has troubling implications. If administrations can simply undo prior settlements, it could be open season for corporate misconduct.
In addition to blowing up settlements, the Trump administration has dropped at least 21 enforcement actions that were pending in federal court, many of them against the nation’s largest companies. The dismissals include a lawsuit against TransUnion, one of the nation’s largest credit reporting companies, accusing it of violating a law enforcement order and using deceptive tricks and manipulative processes on its website to dupe customers into signing up for costly credit-monitoring services. A case was also thrown out against three of the largest banks in the United States — JPMorgan Chase, Wells Fargo and Bank of America — that accused them of rushing the Zelle payment network to market without adopting reasonable fraud-prevention measures, even though they knew consumers were losing hundreds of millions to fraud on the network.
In the nearly 14 years that the C.F.P.B. has been in existence, it has returned more than $21 billion to Americans while operating on a budget of a small fraction of that amount. And while C.F.P.B. directors have championed different priorities from administration to administration, the general ethos has always been to fairly enforce the law. In the past four years, the C.F.P.B. took on some of the biggest banks and tech companies. It secured orders requiring companies to pay more than $6.5 billion to people who, for example, were charged illegal junk fees by their banks, service members saddled with predatory loans and older Americans whose mortgage servicer wrongly convinced them they could lose their homes. The agency also imposed on all defendants from 2021 to 2024 around $3.5 billion in penalties to deter lawbreaking — money that goes into a fund for victims of corporate misconduct nationwide.
The Trump administration’s actions to effectively pardon corporate wrongdoers set a dangerous precedent for the fair administration of law in our country. If corporate agreements with the federal government to change illegal practices and redress victims can be wiped away behind closed doors, then those agreements will soon have no meaning at all.
Eric Halperin is a former director of enforcement at the Consumer Financial Protection Bureau and is a visiting senior fellow at the Consumer Federation of America.
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