The CFPB drops its enforcement lawsuits against Capital One, Rocket Homes and more
A Rocket Companies sign is displayed on the exterior of the New York Stock Exchange, Thursday, Aug. 6, 2020, in New York. (AP Photo/Mark Lennihan)
NEW YORK (AP) — The Consumer Finance Protection Bureau has dropped several enforcement actions against companies like Capital One and Rocket Homes, just weeks under new leadership and turmoil at the agency caused by orders from Trump administration.
In notices of voluntary dismissals filed on Thursday, the CFPB dropped lawsuits it had brought against Capital One, Rocket Homes, Vanderbilt Mortgage and Finance, owned by Warren Buffett’s Berkshire Hathaway, and others.
Those suits were all filed under the agency’s previous director, Rohit Chopra, who President Donald Trump fired just weeks ago. The CPFB has since plunged into turmoil — with the White House later ordering it to halt nearly all its work. The administration also closed the agency’s headquarters and moved to fire scores of its workers.
Trump has defended his administration’s broadside against the CFPB — including recent claims about the agency being “set up to destroy people.” But supporters of the agency stress that it provides crucial oversight and protects consumers from being vulnerable to predatory business practices.
Trump nominated former Federal Deposit Insurance Corporation board member Jonathan McKernan to be agency’s new director, who faced a Senate committee hearing Thursday.
The CFPB is tasked with creating rules and taking enforcement actions to protect consumers from unfair, deceptive, or abusive practices by a wide range of businesses and other institutions. Since its founding, the bureau has said that it’s obtained nearly $20 billion in financial relief for U.S. consumers — in the form of canceled debts, compensation, and reduced loans.
Legal action from the CFPB often involves banks, mortgage servicers, credit card companies, student loan processors, payday lenders, money transfer providers, credit reporting agencies and debt collectors.
Last month, prior to Trump taking office, the CFPB sued Capital One for allegedly misleading consumers about its offerings for high-interest savings accounts — with the bureau accusing the banking giant of “cheating” customers out of more than $2 billion in lost interest payments as a result. Meanwhile, its Jan. 6 suit against Vanderbilt Mortgage accused the lender of pushing consumers into loans they couldn’t afford to buy manufactured homes. And the CFPB’s December complaint against Rocket Homes alleged a “kickback scheme” from the company to illegally steer prospective borrowers to Rocket Mortgage, which operates under the same parent company, and away from other competitors.
But all those cases will now be discontinued with Thursday’s actions. Court filings in the Rocket Homes case notes that the “Consumer Financial Protection Bureau, dismisses this action, with prejudice, against all Defendants.” Dismissing a case without prejudice means that it cannot be refiled. Similar wording was used in the dismissals of the CFPB’s Capital One and Vanderbilt Mortgage suits.
In a statement Thursday, Rocket Homes welcomed its dismissal and said “it is good to see the truth come to light.” The company called the suit “an empty claim brought forth by former CFPB director Chopra for the sole purpose of seeing his name in headlines during the final days in public office.”
Capital One welcomed the CFPB’s Thursday decision, too, noting that it had “strongly disputed” the action filed against the company. The Associated Press also reached out to Vanderbilt Mortgage for comment.
The CPFB isn’t the only federal agency to signal a pullback on previous enforcement action under the new administration. The U.S. Securities and Exchange Commission, for example, has either closed or paused legal action against several cryptocurrency platforms in recent weeks, as the regulator tries to present itself as more crypto-friendly under Trump.
Earlier this month, Binance and the SEC filed a joint motion to pause its high-profile lawsuit against the crypto exchange. And both Coinbase and Robinhood have said that cases against them have also been dismissed or closed, although the SEC declined to immediately comment further.