Outgoing CFPB’s Lame Duck Rulemakings Reiterate Need for Reform at Increasingly Political Bureau

What’s Happening
Following the 2024 election, lawmakers called on the Biden Administration’s regulators to cease promulgating rules and regulations. While all of the other banking regulators have heeded this call, the Consumer Financial Protection Bureau (CFPB) disregarded these requests and kicked its politically-driven rulemakings and actions into overdrive in the lame duck period of the Administration.
What They Are Saying
As Senate Banking Committee Chair Tim Scott (R-S.C.) said:
“On November 6th, Americans across the country rejected your administration’s radical economic agenda and delivered President Trump and the incoming Republican Congress a clear mandate to usher in a new era of government. Given this mandate, it is incumbent upon you and your administration to ensure that President Trump can implement the agenda the American people voted for by allowing him to take office on January 20th with a fresh slate. As the top Republican on the Senate Committee on Banking, Housing, and Urban Affairs, I call on the agencies overseen by the Committee to cease all rulemaking, including the finalization of any pending or proposed regulations or guidance, and to comply with federal record retention laws and preserve all agency documents, records, and communications.”
As House Financial Services Committee Chair French Hill (R-Ark.) said:
“In light of the historic win […] by President-elect Donald J. Trump, I call on you to immediately cease all ongoing rulemaking actions and suspend the proposal or promulgation of any regulations. Americans have expressed their widespread discontent over the outgoing administration's excessive regulatory overreach throughout the past four years. This relentless rulemaking agenda has stifled economic growth and innovation, and restricted consumer access to financial products. As a matter of transparency and public accountability, each of your agencies should abandon any action or plan to force through a politicized regulatory agenda, which voters have already rejected. It is in the interest of all Americans that this agenda be halted immediately in order to restore the balance between the government and the people it serves.”
Why It Matters
Since November, CFPB Director Rohit Chopra has doubled down on his decision to disregard lawmakers’ requests to cease activities by filing numerous lawsuits against companies days before the new Administration takes over and issuing politically-driven, misguided rules and regulations. While the next Administration will be able to make key determinations about many of these last-minute actions, it will require a review and undoing by the next Administration, which wastes resources of both government and the private sector.
This is in stark contrast to other regulators – Comptroller of the Currency Michael Hsu, FDIC Chairman Martin Gruenberg, and Federal Reserve Vice Chair for Supervision Michael Barr all testified before Congress that no rulemakings would take place until after the change in Administrations.
While the outgoing CFPB leadership may see this as burnishing its legacy, these actions have only eroded trust in the CFPB and government institutions more broadly. These partisan activities reiterate the need for immediate actions to correct the political nature of the Bureau, as well as justify CBA’s calls for long-term reforms needed to reinstate credibility and durability at the agency.
Rulemakings, Regulations, and Requests for Information
- Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications (Nov. 21, 2024 – final rule published in the Federal Register on Dec. 10, 2024)
- The final rule defines larger participants of a market for general-use digital consumer payment applications. Larger participants of this market will be subject to the CFPB’s supervisory authority under the Consumer Financial Protection Act.
- CBA responded with a statement.
- TechNet and NetChoice LLC filed litigation against the CFPB in response to this final rule.
- “Protecting Americans from Harmful Data Broker Practices” (Regulation V) (Dec. 3, 2024 – proposed rule published in the Federal Register on Dec. 13, 2024)
- The proposed rule would limit the sale of personal identifiers like Social Security Numbers and phone numbers collected by certain companies and make sure that people’s financial data such as income is only shared for legitimate purposes, like facilitating a mortgage approval, and not sold to scammers targeting those in financial distress.
- Fair Credit Reporting Act (Regulation V); Identity Theft and Coerced Debt (Dec. 9, 2024 – advanced notice of proposed rulemaking published in the Federal Register on Dec. 13, 2024)
- The CFPB is seeking information in advance of preparing a proposed rule to address concerns related to information furnished to credit bureaus and other consumer reporting agencies concerning coerced debt.
- Overdraft Lending: Very Large Financial Institutions (Dec. 12, 2024 – final rule published in the Federal Register on Dec. 30, 2024)
- The final rule unlawfully reclassifies Courtesy Overdraft Services as “credit” under TILA and would drastically reduce the service for consumers who need it.
- CBA responded with a statement and by filing litigation and a motion for preliminary injunction to halt the rule from taking effect.
- Residential Property Assessed Clean Energy Financing (Regulation Z) (Dec. 17, 2024 – final rule published in the Federal Register on Jan. 10, 2025)
- Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) directs the Consumer Financial Protection Bureau (CFPB or Bureau) to prescribe ability-to-repay rules for Property Assessed Clean Energy (PACE) financing and to apply the civil liability provisions of the Truth in Lending Act (TILA) for violations.
- Consumer Financial Protection Circular 2024-07: Design, Marketing, and Administration of Credit Card Rewards Programs (Dec. 18, 2024 – circular published in the Federal Registeron Dec. 30, 2024)
- CFPB holds that credit card issuers violate the law if they or their rewards partners devalue earned rewards or otherwise inhibit consumers from obtaining or redeeming promised rewards.
- CBA responded with a statement.
- Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V) (Jan. 7, 2025 – final rule published in the Federal Register on Jan. 14, 2025)
- The final rule unlawfully bans the inclusion of medical bills on credit reports used by lenders and prohibits lenders from using medical information in their lending decisions.
- The Consumer Data Industry Association and Cornerstone Credit Union League filed litigation against the CFPB in response to this final rule.
- Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms (Jan. 10, 2025 – proposed rule published in the Federal Register on Jan. 15, 2025)
- The CFPB seeks to expand the definition of “funds” to include crypto and to expand what an “other consumer asset account” is to include (based on the facts and circumstances) video game accounts, virtual currency wallets, and credit card rewards points accounts.
- Policy Statement on No-Action Letters (Policy statement published in the Federal Registeron Jan. 1, 2025)
- Unlawfully bans applications submitted by former CFPB attorneys representing companies as outside legal counsel. The bureau said it created the ban to avoid the appearance of conflicts-of-interest.
- CBA responded with a Facts Matter blog.
- Prohibited Terms and Conditions in Agreements for Consumer Financial Products or Services (Regulation AA) (Jan. 13, 2025 – proposed rule published in the Federal Register on Jan. 14, 2025)
- The Proposed Rule would be widely applicable to nearly all consumer financial services providers and the products they provide (other than small businesses, small organizations, or small governmental jurisdictions, as defined by the Small Business Act). The scope and last-minute nature of this rulemaking are both troublesome, as we have serious concerns about CFPB’s legal authority to regulate consumer contracts in a way that is normally reserved for state legislatures.
- Request for Information (RFI) Regarding the Collection, Use, and Monetization of Consumer Payment and Other Personal Financial Data (Jan. 10, 2025 – published in the Federal Register on Jan. 15, 2025)
- The CFPB issued an RFI asking for comments on the use of consumers’ personal financial data, such as data harvested from consumer payments. Comments are due April 11, 2025.
Supervision and Enforcement Actions
- Orders Global Tel Link to Pay $3 Million for Allegedly Illegally Freezing and Draining Payments Accounts for People Who Are Incarcerated (Nov. 14, 2024)
- Sues Climb Credit and Investment Firm 1/0 for Allegedly Deceiving Borrowers About Coding Bootcamps and Vocational Programs – (Dec. 5, 2024)
- Sues Comerica Bank for Alleged Systematically Failing Disabled and Older Americans (Dec. 6, 2024)
- Comerica had sued the CFPB in N.D. Texas for exceeding its authority with respect to the investigation.
- Orders Federal Supervision of Google Following Contested Designation (Dec. 6, 2024)
- Supervisory Action Against Student Loan Debt Collector Performant Recovery for Alleged Illegal Fee Generating Scheme (Dec. 9, 2024)
- Sues JPMorgan Chase, Bank of America, and Wells Fargo for Allegedly Allowing Fraud on Zelle (Dec. 20, 2024)
- CBA responded with a statement.
- Files Lawsuit to Stop Alleged Illegal Kickback Scheme to Steer Borrowers to Rocket Mortgage(Dec. 23, 2024)
- Sues Walmart and Branch Messenger for Allegedly Illegally Opening Deposit Accounts for Delivery Drivers (Dec. 23, 2024)
- Sues Vanderbilt for Allegations regarding Manufactured Home Loans (Jan. 6, 2025)
- Sues Experian for Alleged Misconduct in Investigations of Credit Report Errors (Jan. 7, 2025)
- Sues Capital One for Allegedly Misleading Consumers on Interest Payments on Savings Accounts (Jan. 14, 2025)
- Sues to Address Allegedly Illegal Debt Collection Practices by the National Collegiate Student Loan Trusts (Jan. 16, 2025)
- Orders Operator of Cash App to Pay $175 Million and to Fix Alleged Failures on Fraud (Jan. 16, 2025)
- Orders Equifax to Pay $15 Million for Alleged Improper Investigations of Credit Reporting Errors(Jan. 17, 2025)
- Orders Honda’s Auto Financing Arm to Pay $12.8 Million regarding alleged COVID-19 and other Credit Reporting Allegations (Jan. 17, 2025)
The Bottom Line
Director Chopra may view his flurry of last-minute actions as a political win. But, illustrated by the marked contrast of all of the other Federal banking regulators, the CFPB’s lame duck actions sow further damage to the durability and credibility of an agency tasked with overseeing one of the nation’s most important industries and the millions of consumers banks serve.
To bolster Americans’ trust and confidence in the CFPB, the Trump Administration and new Congress have a unique and important opportunity to institute meaningful reforms to the CFPB.
In a new white paper released earlier this week, CBA provided a blueprint to do just that, outlining immediate and longer-term actions policymakers should take to ensure the CFPB remains a strong, durable, and credible regulator for decades to come, regardless of what political party occupies the White House.
CBA Advocacy
- To read the white paper – “Reforming the CFPB into a Strong and Durable Regulator Americans Deserve” – outlining immediate and long-term actions the incoming Administration could act upon and, separately, legislation for the new Congress to prioritize to transform the Bureau to better serve American consumers, click HERE.
- To read CBA’s “Vision for America – A Bank Policy Agenda for All,” which outlines the retail banking industry’s priorities, beliefs, and positions on a number of consumer-focused financial services policy issues, click HERE.
- To read CBA President and CEO Lindsey Johnson’s op-ed on the need for financial regulations to focus on sound policy, not partisan politics, click HERE.