CFPB Blasts Former Bureau Leadership For 'Regulatory Overreach'

The CFPB, under former Director Rohit Chopra, regularly engaged in regulatory overreach, the Bureau's current leadership said in its semi-annual report, covering the period from April 1- September 30, 2024.

"As indicated throughout the Report, under his leadership, the Bureau regularly engaged in an overreach of its statutory mandates via punishment of disfavored industries," the Bureau, under current Acting Director Russell Vought said, in the report. "This overreach and weaponization of the government manifested especially clearly in burdensome regulations and guidance and in investigations and cases that the Bureau initiated."

The CFPB said one of the most "shameful" examples was a lawsuit against Townstone, a nonbank retail mortgage company in Chicago.

"Under the guise of enforcement of the Equal Credit Opportunity Act, the Bureau targeted Townstone based on an alleged shortfall of the number of applicants from minority areas as compared to other mortgage companies in Chicago," the CFPB said, in the report. "This was a purely statistical difference and based on an arbitrary scale [that the] CFPB devised and which it impermissibly equated to discrimination." The Bureau said that the CFPB continued the prosecution of that business because Townstone's owner made comments about crime in Chicago that Bureau officials found offensive. "Under my leadership, we sought to expose these abuses and the Bureau's trampling on Americans' First Amendment rights," Vought wrote. We previously reported on the CFPB's attempt to unwind its consent order with Townstone, which was rejected by the court.

Vought also cited a case against Credova Financial, LLC. "Credova's use of innovative financial technology solutions to provide consumer financing to facilitate the exercise of Americans' Second Amendment rights made it a target for the Bureau," Vought wrote. According to Credova, it provides point-of-sale financing to outdoor recreation merchants and the firearms industry. Vought also stated that the probe "was also one of numerous regulation-by-enforcement actions for which the CFPB under former Director Chopra became infamous. Under my leadership, that investigation was closed. These are egregious examples of companies being targeted for engaging in protected political speech and exercising their constitutional rights." We previously reported on the CFPB's dropping of the probe of Credova, with the CFPB characterizing the probe as an instance of politically motivated debanking.

Vought wrote that under his leadership, the CFPB is focusing on pressing threats to consumers, in particular those having an impact on servicemembers and their families, and veterans. "The Bureau dedicates its resources to addressing actual fraud, where there are identifiable victims with material and measurable damages, rather than to matters based on the Bureau's perception that consumers made 'wrong' choices," according to Vought. "The Bureau under my leadership seeks to redress tangible harm by getting money back directly to consumers, rather than imposing penalties on companies to simply fill the Bureau's penalty fund."

The CFPB has taken "multiple remedial actions," including the withdrawal of unnecessary and burdensome guidance documents in accordance with a Trump Administration Executive Order, the Bureau said.

The report summarizes various actions taken by the CFPB during the period covered by the report, including significant rules it adopted, guidance that it issued, and enforcement matters and lawsuits that it brought, as well as an analysis of complaints filed with the CFPB. The report notes that many of the actions listed were subsequently addressed by the new CFPB leadership, resulting in the withdrawal of numerous guidance documents, the termination of consent orders, and the withdrawal or dismissal of various enforcement actions.

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