A Weakened CFPB:

Compliance, Enforcement, & Regulatory Consequences

 

Recent actions under the new Administration have raised questions about the future of the Consumer Financial Protection Bureau. As efforts to curtail or potentially dismantle the agency intensify, many in the lending industry are wondering what effect this could have on lending policies.

 

Even if the CFPB is stripped of much of its authority or dismantled entirely, the laws that it enforces remain in effect unless formally repealed or modified.

 

The CFPB was created under the Dodd-Frank Act to enforce a variety of consumer protection laws, including:

• Truth in Lending Act (TILA)
• Real Estate Settlement Procedures Act (RESPA), which is now largely governed under the TILA-RESPA Integrated Disclosure (TRID) rules
• Fair Credit Reporting Act (FCRA)
• Equal Credit Opportunity Act (ECOA)

If the CFPB's power is reduced, that does not automatically mean these laws disappear. For example, TILA and TRID rules will still govern mortgage disclosures, loan agreements, and credit provisions. The regulatory frameworks they establish will continue to apply to lenders unless repealed by Congress or modified through proper rulemaking procedures.

 

State Attorneys General Have Enforcement Power

Even if the federal enforcement of consumer protection laws wanes, state governments may fill the void. Under Section 1042 of the Dodd-Frank Act, state attorneys general (AGs) are empowered to enforce federal consumer protection laws.

This means that state AGs can—and likely will—take action to enforce key consumer financial protections if federal enforcement diminishes. State attorneys general have a long history of enforcing consumer protection laws independently, and many are expected to maintain this role in the absence of federal oversight.

 

Compliance Is Still Critical

Whether the CFPB is diminished or not, financial institutions must remain vigilant. TILA and TRID regulations, among others, still require accurate disclosures, correct loan calculations, and adherence to consumer protections. While a reduced CFPB may lead to changes in enforcement priorities, the legal obligations of lenders and financial institutions remain the same until laws are formally changed or repealed.

 

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance specific to your situation.