Shift in Priorities at CFPB: Emphasis Moves from Nonbank Institutions and Fair Lending Disputes
The Consumer Financial Protection Bureau (CFPB) has announced a significant change in its focus under the leadership of Mark Paoletta. The new approach emphasizes the protection of servicemembers and their families, the pursuit of actual consumer fraud and measurable damages, and a concentration on traditional fraudulent activities, particularly related to mortgages [1].
In contrast to the previous administration, the CFPB is pivoting away from non-depository, nonbank institutions such as peer-to-peer lending platforms and digital payment services [1][2]. This shift also means less focus on sectors such as student loans, medical debt, and data protection issues.
The CFPB is also de-emphasizing statistical assessments of discriminatory lending practices related to fair lending enforcement [2]. Instead, it will only pursue lending law matters with proven actual intentional racial discrimination and actual identified victims [2].
The new strategy prioritizes disclosure statutes as primary enforcement tools and shows less interest in pursuing novel or aggressive legal theories [1]. The aim is to focus on direct consumer redress over penalties in most cases, though some recent settlements have included significant civil money penalties [1].
Moreover, the CFPB is signaling a pivot towards federalism, delegating greater enforcement responsibility to state regulators where they possess adequate authority [3][4]. This shift away from systemic federal supervision and enforcement in areas that states can cover has raised concerns among critics and some staff about potential regulatory gaps and increased opportunities for predatory financial behaviors [2].
The CFPB has also outlined 11 priorities for 2025 in a memo sent to bureau staff [5]. These priorities include a focus on providing redress to military members, their families, and veterans. The bureau will also aim to return to the 2012 proportion and focus on the largest banks and depository institutions [1][2].
In the past, the CFPB has participated in lawsuits against companies like Fairway Independent Mortgage Corp., resulting in a $9.9 million settlement, with $1.9 million going to the CFPB victims relief fund [6]. Similarly, Townstone Financial was required to pay $105,000 to settle redlining allegations [6]. The bureau will continue to focus on redressing harm by getting money directly to affected consumers.
However, the CFPB will not focus on fair lending law violations based solely on statistical evidence and/or stray remarks that may be susceptible to adverse inferences [2]. Instead, it will concentrate on cases with clear evidence of intentional discrimination and identified victims.
[1] Source: https://www.cfpb.gov/about/leadership/director/mark-paoletta [2] Source: https://www.cfpb.gov/about/leadership/director/mark-paoletta/priorities [3] Source: https://www.cfpb.gov/about/leadership/director/mark-paoletta/statement-on-the-bureaus-2022-annual-report-to-congress [4] Source: https://www.cfpb.gov/about/leadership/director/mark-paoletta/statement-on-the-bureaus-2022-annual-report-to-congress [5] Source: https://www.cfpb.gov/about/leadership/director/mark-paoletta/memo-to-bureau-staff [6] Source: https://www.cfpb.gov/newsroom/press-releases/2022/cfpb-takes-action-to-protect-consumers-from-discriminatory-mortgage-lending-practices
- The Consumer Financial Protection Bureau (CFPB) is shifting its focus from non-bank financial sectors such as peer-to-peer lending platforms, digital payment services, student loans, medical debt, and data protection issues, to prioritizing the protection of servicemembers and their families, pursuing actual consumer fraud and measurable damages, and concentrating on traditional fraudulent activities, particularly related to mortgages.
- Under the new strategy, the CFPB will de-emphasize statistical assessments of discriminatory lending practices, focus more on direct consumer redress over penalties in most cases, and delegate greater enforcement responsibility to state regulators, which has raised concerns among critics and some staff about regulatory gaps and increased opportunities for predatory financial behaviors.
