The CFPB drops its lawsuit against Capital One, marking a major reversal
Laurel Wamsley
Jonathan McKernan, nominee for Director of the Consumer Financial Protection Bureau, testifies before the Senate Banking Committee on Thursday in Washington, D.C.
The Consumer Financial Protection Bureau on Thursday dropped five major legal cases it had underway — including a big lawsuit against Capital One — marking a major reversal for an agency that had pursued aggressive action against financial institutions accused of wrongdoing during the Biden administration.
Just last month, the CFPB had accused Capital One of failing to pay more than $2 billion in interest to customers by misleading them into thinking they would be getting higher rates. Capital One denied the charges.
The bureau also dropped its cases against Rocket Homes, Pennsylvania Higher Education Assistance Agency, Vanderbilt Mortgage and Finance, and Heights Finance Holding Company.
News of the court filings dismissing the CFPB’s legal cases came just as the Senate Banking Committee was grilling President Trump’s nominee to lead the agency, Jonathan McKernan.
The CFPB has faced intense turmoil in recent weeks, with over a hundred workers fired and the agency virtually shuttered after staff were told to stop all work. Employees were locked out of the bureau’s D.C. headquarters and the building’s lease was canceled.
People protest in support of the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., earlier this month.
During his Senate testimony, McKernan said the agency had overreached under the Biden administration,
“We’ve got to refocus it on its mission,” said McKernan, who was previously on the board of the FDIC. “We need to right-size it, make sure that we have an efficient CFPB and we need to reinstate some accountability to our elected officials.”
Sen Elizabeth Warren (D-Mass.), who played a major role in the bureau’s founding after the 2008 financial crisis, said during the hearing that she did not believe that the timing of the court filings were coincidental, though she offered no evidence.
“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,” she told McKernan.
Sen. Tina Smith (D-Minn.) said that she had asked McKernan about the pending litigation the day before and had been “assured” that he would “review these lawsuits.”
“This makes me question like who’s really going to be in charge of the CFPB if this is what’s happening while your nomination is being considered?,” she said.
“My question is, who’s going to be in charge here?” Smith asked McKernan.
“Senator, if I’m confirmed, I’m the director,” he replied.
The CFPB is currently led by acting director Russell Vought, the White House budget director and one of the architects of the conservative plan Project 2025.
The Trump administration has made clear its contempt for the bureau, and that it wants to either eliminate CFPB or drastically pare back its work. Musk has tweeted “CFPB RIP.”
Consumer groups decried the end of the litigation.
“Voters in the last election expressed their dismay with high prices, yet the Administration is stopping the essential work to stop corporate abuses that take billions from people every year,” said Lauren Saunders, associate director of the National Consumer Law Center. “The cases dismissed today actually underscore why the CFPB’s work is so essential to investigate practices that are draining hard-earned money from the pockets of everyday people.”
Before joining the FDIC’s Board of Directors, McKernan held staff roles in the Senate, the Treasury, the Federal Housing Finance Agency, and spent a brief stint detailed to CFPB. He previously spent nine years as a lawyer focused on banking and consumer financial laws, according to his prepared testimony. Several business groups have endorsed McKernan’s nomination.
Sponsor Message
Become an NPR sponsor
YOUR MONEY
‘CFPB RIP’
More Stories From NPR
Popular on NPR.org
NPR Editors’ Picks
What if I’m missing a form? Attorneys answer tax questions from NPR’s audience
Tell us your story about car insurance premiums
Federal judge blocks CFPB from laying off more employees
Up to 100 more workers are fired at CFPB as staff fear mass layoffs are looming
Dozens of CFPB workers are fired as the agency remains shuttered
Alexandria Ocasio-Cortez tells NPR: ‘Everything feels increasingly like a scam’
As the Texas outbreak grows, how contagious is measles, really?
Trump administration layoffs hit NOAA, agency that forecasts weather, hurricanes
Judge says Trump’s mass firing of federal employees is illegal and should be stopped
No signs of forced entry or a carbon monoxide leak in Gene Hackman’s death
Meeting Trump at White House, Zelenskyy hopes for continued aid in war with Russia
Panda Bear navigates a bold new world: the uncertainty of middle age
Hosting an Oscars party? Here are menu ideas for each best picture nominee
Iowa has high cancer rates. Trump’s cuts to CDC and NIH are already hitting the state
Israeli military cites ‘fundamental misunderstanding’ of Hamas ahead of Oct. 7 attack
Who’s in charge of DOGE? (It’s not these women. Or the owl.) Find out in the quiz
LIFE KIT
YOUR MONEY
BUSINESS
BUSINESS
YOUR MONEY
POLITICS
PUBLIC HEALTH
ENVIRONMENT
POLITICS
CULTURE
UKRAINE INVASION — EXPLAINED
MUSIC
OSCARS 2025
PUBLIC HEALTH
MIDDLE EAST CRISIS — EXPLAINED
THE NPR NEWS QUIZ
READ & LISTEN
CONNECT
ABOUT NPR
GET INVOLVED
Consumer watchdog quits cases against firms accused of ripping off Americans
Markets
Fear & Greed Index
Latest Market News
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.
Most stock quote data provided by BATS. US market indices are shown in real time, except for the S&P 500 which is refreshed every two minutes. All times are ET. Factset: FactSet Research Systems Inc. All rights reserved. Chicago Mercantile: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices Copyright S&P Dow Jones Indices LLC and/or its affiliates. Fair value provided by IndexArb.com. Market holidays and trading hours provided by Copp Clark Limited.
© 2025 Cable News Network. A Warner Bros. Discovery Company. All Rights Reserved.
CNN Sans ™ & © 2016 Cable News Network.
MORE FROM CNN
CNN BUSINESS VIDEOS
CFPB moves to drop suit accusing Capital One of cheating customers out of $2 billion
BREAKING: Trump expected to sign an executive order to make English the official U.S. language
CFPB moves to drop suit accusing Capital One of cheating customers out of $2 billion
The Consumer Financial Protection Bureau is moving to drop a suit against Capital One brought during the Biden administration just last month that accused the bank of cheating customers out of a collective $2 billion.
A one-line court filing Thursday said the agency was seeking to voluntarily dismiss its suit with prejudice, meaning that it would not be revived.
An agency spokesperson did not immediately respond to a request for comment.
In a statement, Capital One said: “We welcome the CFPB’s decision to dismiss this action, which we strongly disputed.”
Then-CFPB Director Rohit Chopra brought the suit in January, accusing the banking giant of “conflating” two similarly named savings accounts and failing to notify them that one of the accounts paid out substantially more in interest payments.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” Chopra said at the time. “Banks should not be baiting people with promises they can’t live up to.”
Capital One had denied the allegations.
“We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration,” it said in a prior statement. “We strongly disagree with their claims and will vigorously defend ourselves in court,” the company said in a statement.”
The move is the latest sign that the agency under Trump plans to scale back Biden-era actions, while the future of the CFPB’s existence continues to be debated.
Earlier Thursday, the CFPB dismissed a suit against a student loan servicer it had accused of illegally collecting on student loans discharged in bankruptcy. Last week, it dropped a case against an online lender it previously accused of deceiving borrowers about loan costs.
Meanwhile, Trump’s nominee to head the agency, Jonathan McKernan, told a Senate committee earlier Thursday that he believed the CFPB had recently overstepped the bounds of its mandate, and that — assuming it continues to operate — it should become more streamlined and accountable.
McKernan’s nomination process has come amid calls by Trump administration officials to dismantle the CFPB outright. Office of Management and Budget head Russell Vought, who has nominally been put part in charge of the agency, issued a directive earlier this month to suspend all work there. And Elon Musk, the figurehead of Trump’s Department of Government Efficiency, has stated his desire to “delete” the bureau.
Earlier this month, a judge blocked efforts to enact mass terminations at the agency.
Rob Wile is a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com.
© 2025 NBCUniversal Media, LLC
