The CFPB is undergoing significant changes that could impact credit unions and their members.
On April 30, the CFPB announced a realignment of its enforcement and supervision priorities. The Bureau stated it would focus its resources on pressing threats to consumers, particularly servicemembers, veterans and their families. This shift includes deprioritizing oversight in areas such as student loans, medical debt, consumer data and digital payments. The CFPB emphasized that it would not prioritize enforcement or supervision actions for entities currently outside the stay imposed under Texas Bankers Association v. CFPB.
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Concurrently, the House Financial Services Committee advanced legislation as part of the budget reconciliation process that would significantly reduce the CFPB's funding. The proposal aims to cap the Bureau's funding from the Federal Reserve at 5% of the Fed's operating expenses, down from the current 12%. This change could potentially cut the CFPB's budget by hundreds of millions of dollars. Additionally, the legislation mandates that any surplus funds be returned to the Treasury.
America's Credit Unions has expressed cautious support for the CFPB's refocused priorities, appreciating the emphasis on tangible consumer harms and the reduction of duplicative oversight. However, the organization also voiced concerns about the deprioritization of oversight for nonbank financial companies, highlighting the risk of regulatory gaps that could affect consumers.
The proposed funding cuts raise additional concerns. A significantly reduced budget could impair the CFPB's ability to fulfill its mandate, potentially leading to decreased consumer protection and increased reliance on state regulators. This shift may result in inconsistent regulatory environments across states, posing challenges for credit unions operating in multiple jurisdictions.
“Slashing the CFPB’s funding by 70% is not about trimming waste – it is about killing the watchdog that makes Wall Street banks keep criminals out of your bank account, pushes credit bureaus to fix errors damaging our credit reports, and ensures that big tech companies like PayPal (and Elon Musk’s coming X Money) comply with privacy laws,” Lauren Saunders, associate director of the National Consumer Law Center, said. “With a potential recession looming and tariffs threatening to push prices even higher, Republicans who voted to gut the CFPB are giving corporate cheats and predatory lenders free rein to charge junk fees and put struggling families into debt trap loans.”
As these developments unfold, credit unions are advised to stay informed and engaged with regulatory changes to ensure continued compliance and to advocate for a balanced regulatory framework that protects consumers while allowing credit unions to serve their communities effectively.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
