CFPB Chief Legal Officer Mark Paoletta on April 16, 2025, issued the CFPB's latest staff memo outlining the agency's supervision and enforcement priorities.
CFPB's Top-Level Priorities
- Focus on "pressing threats to consumers" and "tangible harms to consumers," particularly those impacting servicemembers and their families, and veterans
- Reduction in "supervisory events" by 50 percent, shifting of resources away from enforcement and supervision that can be handled by the states
- Shift back to large banks and depository institutions and away from nonbanks/financial technology
- Priority is "actual fraud against consumers" where there are "identifiable victims with material and measurable consumer damages"
- Focus on "redressing tangible harm by getting money back directly to consumers, rather than imposing penalties on companies in order to simply fill the Bureau's penalty fund"
- "All prior enforcement and supervision priority documents are hereby rescinded"
- Deprioritize/minimize duplicative supervision and enforcement
- Narrowed fair lending focus
- The CFPB states that its "primary consumer enforcement tools are its disclosure statutes. The Bureau shall not engage in attempts to create price controls."
Other Memo Highlights
- Focus on "conciliation, correction and remediation of harms subject to consumers' complaints"
- "Supervision should focus on collaborative efforts with the supervised entities to resolve problems so that there are measurable benefits to consumers"
- The CFPB seeks to return to 2012 supervision proportion of banks/depository institutions versus nonbanks (which, in 2012, had a 70 percent/30 percent split, as compared to the 40 percent/60 percent split currently).
- Priority is "actual fraud against consumers" where there are "identifiable victims with material and measurable consumer damages" (as opposed to "matters based on the Bureau's perception that consumers made 'wrong' choices"). The areas of priorities are:
- Mortgage (receiving the highest priority)
- Fair Credit Reporting Act (FCRA)/Regulation V data furnishing
- Fair Debt Collection Practices Act (FDCPA)/Regulation F relating to consumer contracts/debts
- Various fraudulent overcharges, fees, etc.
- Inadequate controls to protect consumer information resulting in actual loss to consumers
- Focus on "redressing tangible harm by getting money back directly to consumers, rather than imposing penalties on companies in order to simply fill the Bureau's penalty fund"
- Focus on providing redress to servicemembers and their families and veterans
- Deprioritize participation in multi-state exams unless required by statute (rather than merely permitted)
- Deprioritize supervision "where states have and exercise ample regulatory and supervisory authority, unless required by statute (rather than merely permitted)"
- "Minimize duplicative enforcement, where state regulators, another federal regulator, or law enforcement authorities are currently engaged in or have concluded an investigation into the same matter"
- Eliminate "duplicative supervision or supervision outside of the Bureau's authority"
- As feasible, coordinate exams' timing with other/primary federal regulators
- Abandon pursuit of supervision using "novel legal theories, including of the Bureau's authority" and focus on areas "clearly within its statutory authority"
- CFPB will not engage in or facilitate "unconstitutional racial classification or discrimination" in its fair lending enforcement.
- No redlining or bias assessment supervisions or enforcement based solely on "statistical analysis" for fair lending law; only proven actual intentional discrimination and actual identified victims. "Such matters shall be brought to the leadership's attention and maximum penalties will be sought."
The areas of deprioritization are:
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- loans or other initiatives for "justice involved individuals" (criminals)
- medical debt
- peer-to-peer (P2P) platforms and lending
- student loans
- remittances
- consumer data
- digital payments
CFPB Mass Layoffs Resume
The memo seems to attempt to provide sufficient justification for the courts to allow for reductions in force (RIF) of approximately 50 percent of the CFPB's supervision and enforcement staff and shift priorities back to what "traditional" supervision and enforcement looks like. On April 17, 2025 – just one day after this staff memorandum was issued – the CFPB reportedly conducted RIF affecting nearly 90 percent its staff (according to public reporting, the total number of staff terminated is approximately 1,400-1,500).
Within hours of the terminations, counsel for the plaintiffs in the lawsuit brought against the CFPB's acting director to challenge his effort to dismantle the CFPB moved the U.S. District Court for the District of Columbia for an order to show cause why the defendants are not violating the preliminary injunction. As Holland & Knight previously reported, the D.C. Circuit partially stayed the district court's preliminary injunction and prohibited CFPB leadership from terminating employees unless the agency conducted a "particularized assessment" determining that the employees were "unnecessary to the performance of defendants' statutory duties." While the term "particularized assessment" is not defined in the D.C. Circuit's order, the CFPB's assessment took place within less than four business days after the order's issuance, so the court will likely decide on its sufficiency soon.
On April 18, 2025, U.S. District Judge Amy Berman Jackson held a hearing in light of the plaintiffs' emergency motion. As a result, she temporarily barred the Trump Administration from going forward with its CFPB staff RIF as she continues to review whether it violates her previous order. She also prevented the CFPB from terminating the employees' computer access, which had been scheduled to take place later that day and until she holds a follow-up hearing on April 28, 2025.
"It's not going to happen in the meantime," Jackson said. "We're not going to disburse 1,483 people into the universe and have them be unable to communicate with the agency anymore until we have determined whether that is lawful or not."
Jackson also commented that she is "deeply concerned" that Trump Administration officials are not complying with her earlier order that maintains the agency's existence until she rules on the merits of this lawsuit.
Stay tuned for further developments.
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