The Consumer Financial Protection Bureau (CFPB) is continuing its broad regulatory rollback as it actively solicits public comment on several proposed rescissions, including its nonbank registry rule and state official notification requirements. At the same time, the CFPB has initiated a series of new rulemakings, sending five proposed rules to the Office of Information and Regulatory Affairs (OIRA), targeting areas such as credit reporting, debt collection, the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). On Capitol Hill, both the House and Senate are exploring measures to limit the CFPB’s access to Federal Reserve funding through the budget reconciliation process, allowing for a further shift in the CFPB’s operational landscape.
Rescission of State Official Notification Rules
On May 21, the CFPB issued a direct final rule along with a request for comments to rescind the State Official Notification Rule, which requires state attorneys general and regulators to provide the CFPB with 10 days’ advance notice before initiating actions to enforce the Dodd-Frank Act. This notice period provides the CFPB with an opportunity to review state claims and determine whether to intervene or coordinate on enforcement strategy. The CFPB’s proposal to repeal the rule would remove this administrative step, potentially expediting state-level enforcement actions. Within the direct final rule, the CFPB states that the state official notification rule is duplicative and does not provide any additional protections beyond those already established by statute.
Rather than repealing the rule, stakeholders may wish to consider advocating for amendments that would strengthen procedural safeguards. For example, extending the notice period from 10 to 30 days would provide the CFPB with additional time to review proposed state actions and determine the appropriate level of federal involvement. Comments on the proposed repeal are due by Friday, June 20.
Nonbank Registry Rule Proposed Rescission
The CFPB also issued a proposed rule and request for comment on May 14 to rescind all provisions of its nonbank registry rule finalized in July 2024. The final rule established a registry of nonbank companies that have entered into consent agreements or that have otherwise been found by the CFPB to be in violation of laws under their jurisdiction. The final rule required debt collectors, mortgage lenders, payday and other nonbank lenders, credit reporting agencies and other nonbank financial services companies to report regulatory actions taken against them at the federal and state levels. Brownstein’s complete analysis of the rule can be found here.
Within the proposed rescission, the CFPB argued that the final rule poses a significant regulatory burden and is unnecessary since Congress has already empowered multiple other federal and state agencies to enforce consumer financial laws. The CFPB is expected to issue additional proposed rules to rescind or revise CFPB regulations issued under the prior administration. Comments on the proposed rescission are due by June 13.
Rules Submitted to OMB
On June 4, the CFPB submitted five proposed regulatory actions to OIRA for review:
- Loan Originator Compensation Requirements Under the Truth in Lending Act (Regulation Z); Rescission
- Discretionary Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X)
- Discretionary Mortgage Servicing Rules Under the Truth in Lending Act (Regulation Z)
- Defining Larger Participants of the Consumer Debt Collection Market
- Defining Larger Participants of the Consumer Reporting Market 2025
The CFPB has not yet disclosed the specific content of the rulemakings, which would enter the pre-rule stage if approved by OMB. However, the CFPB appears to be poised to rescind the Loan Originator Compensation Requirements Under TILA, which establishes requirements and restrictions on how mortgage loan originators may be compensated.
The OMB’s rulemaking review process can extend over several weeks, though it is limited to a maximum of 90 days per rule. Under the current Trump administration, some regulatory reviews have been expedited as part of broader deregulatory initiatives.
Congressional Efforts
Amid the CFPB’s deregulatory efforts, the House-passed One Big Beautiful Bill (H.R. 1) includes a provision that would reduce the CFPB’s long-term budget by cutting its funding cap from 12% to 5% of the Federal Reserve’s operating budget. The attention now shifts to the Senate, as Republicans in the Senate Banking Committee are proposing a complete elimination of the CFPB’s Federal Reserve funding (reducing the cap from 12% to 0%). Both Republican and Democratic senators on the Banking Committee question whether zeroing out funding would survive Byrd Rule scrutiny, as the Senate parliamentarian could deem it as a substantive policy shift rather than a purely fiscal measure.
Next Steps
The CFPB’s efforts to rescind existing regulations and solicit public feedback are part of a broader deregulatory agenda focused on reducing overlapping enforcement actions and streamlining regulatory requirements. Meanwhile, Office of Management and Budget (OMB) Director Russell Vought continues to serve as acting CFPB director, and it remains uncertain whether the administration will nominate a new director after withdrawing Jonathan McKernan’s nomination. Stakeholders should continue to provide feedback to the new administration about regulatory burdens and, alternatively, areas for needed clarity.
