CFPB Drops Lawsuits against Capital One and Rocket Mortgage Affiliate

The Consumer Financial Protection Bureau (CFPB) has dismissed at least four enforcement lawsuits undertaken by the previous administration’s director, Rohit Chopra. The agency issued a notice of voluntary dismissal for cases involving Capital One, Berkshire Hathaway-owned Vanderbilt Mortgage & Finance, a unit called Rocket Cos, and a loan servicer named Pennsylvania Higher Education Assistance Agency.

The moves are the latest sign of the abrupt shift at the agency since acting CFPB Director Russell Vought took over this month. The CFPB has also shuttered its Washington headquarters, fired about 200 employees, and told those who remain to stop nearly all work.

The agency’s new leadership has also dismissed other cases, including one against SoLo Funds, a fintech lender, and TransUnion, a credit agency. The CFPB accused these companies of violating consumer financial protection laws, but the new leadership has chosen to drop the cases.

A Capital One spokesman said the bank welcomed the dismissal of its case, which it "strongly disputed." A spokesman for Rocket also lauded the news, saying that the company "has always connected buyers with top-performing agents based only on objective criteria like how well they helped homebuyers achieve their dream of homeownership."

The dismissals have been welcomed by the companies involved, with shares of Capital One and Rocket climbing after the news.

Billions Lost

Current and former CFPB employees have told CNBC that legal cases with upcoming docket dates would likely be dismissed as the agency disavows most of what Chopra has done. Eric Halperin, the CFPB’s former head of enforcement, said in a phone interview that the spate of CFPB dismissals was unprecedented in the bureau’s history.

"Just from the cases that were dismissed today, there’s billions of dollars in consumer harm that the CFPB will never be able to get back for consumers," he said.

Embarrassment

The Thursday filings began appearing at the same time that senators were grilling Jonathan McKernan, President Donald Trump’s pick to lead the CFPB on a permanent basis, during a nomination hearing.

"Mr. McKernan, literally while you’ve been sitting here and you’ve been talking about the importance of following the law, we get the news that the CFPB is dropping lawsuits against companies that are cheating American families, or alleged to be cheating American families," Sen. Elizabeth Warren, D-Mass., said.

"It seems to me the timing of that announcement is designed to embarrass you," Warren said.

Conclusion

The dismissals of these cases raise questions about the priorities of the new leadership at the CFPB. While the companies involved have welcomed the news, consumer advocates are concerned that the agency is abandoning its mission to protect consumers.

FAQs

Q: Why did the CFPB dismiss the lawsuits?
A: The CFPB dismissed the lawsuits as part of a broader shift in priorities under the new leadership.

Q: What does this mean for consumers?
A: The dismissals mean that consumers will not receive relief or compensation for the alleged harm they suffered at the hands of the companies involved.

Q: What does this say about the CFPB’s priorities?
A: The dismissals suggest that the CFPB is prioritizing the interests of companies over those of consumers.