The CFPB’s Desperate, Final Gasp Under Biden
The WasteWatcher
The Consumer Financial Protection Bureau (CFPB) has long been criticized due to its nontraditional funding structure and lack of congressional oversight. Director Rohit Chopra has made matters worse by repeatedly seeking to expand the agency’s authority and prioritizing political objectives over fulfilling its purported mission to protect consumer finances. The unprecedented abuse and overreach have been on full display in the final weeks of the Biden administration.
On December 20, 2024, the CFPB rushed out the first of three sweeping lawsuits that immediately drew criticism and stoked concerns that the agency was simply playing politics. The CFPB sued payment platform Zelle, along with JPMorgan Chase, Bank of America, and Wells Fargo, claiming that they failed to protect consumers from fraud. Zelle, which is co-owned by the banks, responded by saying the lawsuit is “factually flawed” and its timing of appeared to be driven by political factors. On December 23, 2024, the CFPB filed a complaint against Walmart, alleging the company forced contractors to be paid exclusively through fintech company Branch Messenger which charged excessive junk fees. Walmart and Branch rejected the allegations and accused the CFPB of not honoring due process of law.
The CFPB handed out another “Christmas present” on December 23, 2024 when it filed a lawsuit against Rocket Homes, alleging that the lender participated in a sprawling kickback scheme with the Jason Miller Group real estate brokerage and 45 brokerage affiliates across 41 states and the District of Columbia. Among other issues that belie these claims, one-third of consumers with a loan application already in progress with Rocket Mortgage (a lender), before contacting Rocket Homes (a broker), chose to close with a different lender, according to the company. Rocket Homes is therefore not funneling business toward its affiliate lender but instead encouraging homebuyers to shop around for the best deal on a mortgage. Another defendant in the case, Jason Mitchell of The Mitchell Group, later said the CFPB offered him a settlement that would have forced him to admit things that “simply are not true.”
Instead of relying on appropriations from Congress, the CFPB’s funding comes from the Federal Reserve System. This raised questions about the legitimacy of the CFPB, which were resolved when the Supreme Court decided in a 7-2 decision on May 16, 2024, that the agency was constitutional. Despite warnings from the House Financial Services Committee against finalizing partisan rulemakings prior to the Trump administration taking office, the Biden CFPB is moving full steam ahead with its political agenda.
The CFPB has little oversight from Congress and has been expanding its authority with frivolous lawsuits before President-elect Trump is sworn into office. It is no wonder that President-elect Trump’s allies, including at the DOGE, have already begun to float dissolving the CFPB. They are right to do so.