CFPB Drops Major Lawsuit Against Capital One Amid Controversy

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) announced Thursday that it has dropped five significant lawsuits, including a high-profile case against Capital One, marking a notable shift for the agency previously known for its aggressive stance on corporate accountability under the Biden administration.

The CFPB’s decision comes on the heels of allegations against Capital One for misleading customers and failing to pay more than $2 billion in interest, a charge that the financial institution has denied. Alongside Capital One, the CFPB also dismissed cases against four other unnamed companies.

This development coincided with a Senate Banking Committee hearing concerning Jonathan McKernan, President Donald Trump‘s nominee for director of the CFPB. During his testimony, McKernan criticized the agency’s approach under the Biden administration, stating, “We’ve got to refocus it on its mission.” He advocated for a more streamlined and accountable CFPB.

Contention arose during the hearing as Senator Elizabeth Warren (D-Mass.) suggested the timing of the lawsuits’ dismissal was strategically intended to undermine McKernan. She remarked, “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.” Senator Tina Smith (D-Minn.) also expressed skepticism toward the agency’s direction, questioning McKernan about the latest litigation developments and implying a lack of agency stability given the circumstances.

If confirmed, McKernan affirmed his leadership role, stating, “Senator, if I’m confirmed, I’m the director.” Currently, the CFPB is under the interim guidance of acting director Russell Vought, who previously served as President Trump’s budget director.

The Trump administration’s attitude toward the CFPB has been clear, aiming to either abolish the agency or significantly diminish its influence. In a recent tweet, Musk expressed disdain for the CFPB, posting, “CFPB RIP.” In response to the dismissal of lawsuits, consumer advocacy groups have voiced strong criticism, highlighting the detrimental impact of abandoning litigation aimed at halting corporate misconduct.

Lauren Saunders, associate director of the National Consumer Law Center, emphasized the importance of the CFPB’s role, arguing, “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.” She added that the cases dropped today reinforce the necessity of the CFPB’s investigation work.

Prior to his nomination, McKernan held various positions in banking and consumer financial law, including roles at the Senate, Treasury, and Federal Housing Finance Agency. He has also received endorsements for his nomination from several business groups.