Consumer watchdog quits cases against firms accused of ripping off Americans – CNN

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The Consumer Financial Protection Bureau (CFPB) abruptly dropped cases on Thursday against multiple companies that had previously been accused of hurting consumers.

Court filings indicate that the consumer watchdog has decided to dismiss lawsuits previously filed against Capital One, Rocket Homes, a unit of Warren Buffett’s Berkshire Hathaway and a student loan servicer. Just weeks earlier the CFPB accused Capital One of “cheating” millions of customers out of billions of dollars of interest payments.

The decision to abandon the cases demonstrates the hands-off approach to regulation from the Trump administration, which has scrambled to sideline the CFPB in recent weeks in an effort led by Elon Musk’s Department of Government Efficiency (DOGE).

Trump-appointed officials have ordered staff to halt all work – including fighting financial crime. Now the CFPB is dropping multiple cases it had previously pursued.

“The most important consumer financial watchdog is no longer on the beat,” Christopher Peterson, a law professor at the University of Utah and former CFPB official, told CNN in a phone interview. “This means that major corporations who have ripped off ordinary working people are going to get away scot-free.”

The moves come the same day as Jonathan McKernan, President Donald Trump’s pick to head the CFPB, faces questions from US senators during a confirmation hearing on Capitol Hill.

Sen. Elizabeth Warren, the Massachusetts Democrat who helped create the CFPB, noted the dropping of the lawsuits at McKernan’s hearing.

“It seems to me the timing of that announcement is designed to embarrass you and to show exactly who is in charge of this agency right now: Elon Musk and his little band of hackers,” Warren said to McKernan. “Elon Musk is determined to shut down this agency even though he has no legal authority to do that.”

In a Thursday filing in US District Court, the CFPB filed a notice of a voluntary dismissal of its lawsuit against Capital One.

It’s a dramatic shift from January 14, when the CFPB, then led by former President Joe Biden-appointed officials, sued Capital One for “cheating millions of consumers” out of interest rate payments. Regulators accused Capital One of failing to pay more than $2 billion in interest to holders of its high-interest savings accounts – a claim that the company denied.

A Capital One spokesperson told CNN: “We welcome the CFPB’s decision to dismiss this action, which we strongly disputed.”

“The CFPB was created to be a watchdog for big banks, not a lapdog, and dismissing this case is a gift to Capital One,” Erin Witte, director of consumer protection at the Consumer Federation of America, said in a statement.

The CFPB said in a separate filing it has dismissed with prejudice its case against Vanderbilt Mortgage and Finance.

This is a reversal from early January when the CFPB, then led by Biden-appointed officials, alleged Vanderbilt pushes borrowers into “unaffordable loans” that left many families struggling to make payments. The bureau argued at the time that Vanderbilt “knowingly traps people in risky loans” and its business model “ignored clear and obvious red flags that the borrowers could not afford the loans.”

Vanderbilt is a unit of Clayton Homes, the largest manufactured home builder in the United States and a subsidiary of Buffett’s Berkshire Hathaway.

A separate filing Thursday indicated the CFPB voluntarily dismissed a case against Rocket Homes, a unit of Rocket Companies, and The Jason Mitchell Group real estate brokerages.

In December, the CFPB had accused the group of an illegal kickback scheme to steer mortgage applications to Rocket.

In a statement, Rocket called the case “a misrepresentation of the facts, as we have said from the day the suit was filed… We are proud to put this matter behind us and remain focused on our mission to help everyone home.”

Shares of Capital One and Rocket Companies climbed more than 1% Thursday morning, even as the S&P 500 dipped slightly.

In a third filing, the CFPB on Thursday dropped its case against Pennsylvania Higher Education Assistance Agency, a student loan servicer that does business as American Education Services, or AES.

In May, the CFPB sued the student lender, alleging it hurts student borrowers by failing “to recognize that some private student loans are discharged in bankruptcy.” As a result, the CFPB said, some borrowers paid thousands or even tens of thousands of dollars on student debt they did not owe.

The decision to drop cases was foreshadowed by the fact that the CFPB recently canceled contracts with multiple expert witnesses it had hired in cases against companies accused of hurting consumers.

“While it may not be a complete ‘RIP’ for the CFPB, its continued existence will likely only be a shell of its former self,” Ed Mills, Washington policy analyst at Raymond James, wrote to clients in a note on Thursday.
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Source: https://www.cnn.com/2025/02/27/business/cfpb-elon-musk-capital-one-student-debt/index.html