Capital Corner: Mid-Year CFPB Verdict: New Sheriff in Town

Defense credit unions and DCUC have justifiably been focused over the last few years on the activist approach to financial regulations coming out of the Consumer Financial Protection Bureau (CFPB). Now after almost six months of the Trump Administration, an unmistakable shift in policy focus is apparent. 

Simply put, the Trump CFPB is working to undo everything done during the Biden Administration under the leadership of Rohit Chopra. 

Consider:

• In late May CFPB told a federal judge it would now seek to vacate its controversial Biden-era “open banking” rule. DCUC and other credit union groups had expressed serious concerns regarding the potential unintended consequences of the regulation that would have created a new, expansive financial information-sharing requirement. While the rule claimed to enhance consumer access and promote competition, DCUC contended it might inadvertently expose credit unions to increased reputational and operational risks, particularly if third-party entities mishandle shared data. The cooperative nature of credit unions, built on trust and member relationships, could be compromised by such vulnerabilities. Additionally, DCUC asserted that the rule’s implementation would impose significant compliance burdens on credit unions, especially smaller institutions, without commensurate benefits. The third-party sharing requirement, which carries the potential for increased fraud and data breaches, raised substantial concerns about member privacy and the security of sensitive financial information.
• CFPB also voided another controversial regulation, concerning credit card late fees. This comes after the U.S. District Court for the Northern District of Texas found that the rule likely violated the Credit Card Accountability and Disclosure Act (CARD Act). CFPB acknowledged that the rule failed to allow card issuers to impose penalty fees that are “reasonable and proportional” to violations, as required by the CARD Act.
• Congress has done its part to roll back CFPB’s work in the last Administration. In March both chambers of Congress approved a Congressional Review Act (CRA) resolution overturning the Biden-era CFPB rule on overdraft fees (a move strongly supported by DCUC in congressional outreach since January). Critics emphasized that the rule would have imposed detrimental price controls on overdraft services, potentially leading to more unbanked individuals and fewer consumer options.
• More recently, House Financial Services Chairman French Hill (R-AR) signaled his intent to introduce legislation that would repeal a CFPB small business data collection requirement for credit unions and other financial institutions.

Taken together, a clear pattern has emerged that this is not Joe Biden’s CFPB; President Trump and his appointees are putting a clear stamp on the Bureau.

Also noteworthy is that Jonathan McKernan, member of the FDIC who was Trump’s initial pick to head CFPB, was withdrawn. McKernan was considered to be a stability-oriented nominee, while the new rumored replacement, Mark Calabria is not. Calabria has developed a reputation for sharp-elbows in his stint at the Federal Housing Finance Agency (FHFA) during the first Trump Administration, and if confirmed he would provide a well-defined conservative contrast to his left-of-center predecessor Chopra.

New sheriff in town, indeed