CFPB Announced That They Are Returning To Their Original Purpose

The Consumer Financial Protection Bureau (CFPB) has a mandate that they ignored. Instead, they focused on efforts to protect student borrowers and people with medical debt, as well as oversight of popular digital payment platforms such as Venmo and Zelle. Last 16 April, their leaders announced a policy shift as they go back in doing what they were meant to do.

A memo circulated internally outlining the agency’s new enforcement and supervision priorities under President Donald Trump's administration. It was written by Chief Legal Officer Mark Paoletta and first reported by The Wall Street Journal. It details plans to broadly dial back regulatory efforts and focus most of its remaining energy on large banks instead of tech firms, student loan servicers, and other financial companies that had consumed much of its attention during Joe Biden’s presidency.

The plan would mark a major change in direction for the CFPB, which was created in 2010 in the wake of the housing crisis and Wall Street meltdown that had paralyzed the nation’s economy. The new agency was given the job of enforcing consumer protection laws against the country’s large banks, as well as non-bank financial institutions that previously fell into a regulatory blind spot but were responsible for some of the riskiest lending and most predatory practices heading into the crisis.

In recent years, some of the bureau’s most high-profile efforts have involved policing those non-banks. It has played a particularly central role policing student loan servicers, the massive government contractors responsible for collecting monthly payments from borrowers that have long been a magnet for customer complaints.

In 2024, for instance, the CFPB reached a settlement banning Navient, then the country’s largest servicer, from the industry and fining it US$ 120 million over what it described as years of abuses, including regularly overcharging customers and failing to inform them about their legal rights on repayment. Last May, it sued the Pennsylvania Higher Education Assistance Agency for attempting to collect student loans that had been discharged in bankruptcy.

The agency also made waves late in the Biden administration by taking aim at online payment platforms, suing industry-leader Zelle for failing to prevent fraud on its network and finalizing a rule that would have empowered it to supervise the largest players in the sector.

Easing the burden of medical debts had been a major priority too: In January, the CFPB completed a rule that would have removed unpaid doctor’s bills from credit reports, an initiative it worked on with former Vice President Kamala Harris.

Trump officials and Republicans in Congress have set about undoing many of those efforts this year while also shutting down much of the CFPB’s daily work and attempting to lay off most staff. Under acting director Russell Vought, the bureau has dropped its lawsuits against PHEA and Zelle, while Republicans recently passed a resolution to void the new digital payments regulation. GOP lawmakers have also introduced measures to undo the medical debt rule.

In his memo, Paoletta criticized the bureau for focusing too much attention on non-banks like loan servicers, noting they now consume 60% of its supervision efforts where staff examine firms’ internal data and interview employees to ensure they are following consumer protection laws. He said non-banks should instead take up 30% of their supervision, which he said was the proportion in 2012.

The memo drew immediate criticism from consumer advocates, who said that the bureau would leave student borrowers vulnerable to mistreatment, and that previous leaders had focused on non-banks because they tended to pose some of the biggest risks to consumers and the financial system.