April 22, 2025
In a memo written by Chief Legal Officer Mark Paoletta, appointed by President Donald Trump, he details plans to scale back on regulatory efforts so the agency can focus on large banks instead of tech firms, student loan services, digital payment platforms such as Venmo and Zelle.
The Consumer Financial Protection Bureau (CFPB) will “deprioritize” some efforts it was created to undertake, including protecting student borrowers and consumers with medical debt.
In a memo written by Chief Legal Officer Mark Paoletta, appointed by President Donald Trump, he details plans to scale back on regulatory efforts so the agency can focus on large banks instead of tech firms, student loan services, digital payment platforms such as Venmo and Zelle, and other financial firms, the Wall Street Journal first reported.
It’s essential to note that at least three other federal regulators oversee banks, including the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the FDIC.
How Consumers Will Be Impacted
The CFPB was established in 2010 as a response to the 2008 housing crisis, the Wall Street meltdown, and the subsequent Great Recession. Its mission is straightforward: protect consumers from unfair, deceptive, or abusive practices in the financial services industry.
CFPB regulates payday lenders, fights fraud, and advocates for greater transparency in lending.
Since its inception, the CFPB has introduced key regulations, including limiting overdraft fees and banning medical debt from appearing on credit reports. It has also recovered over $17.5 billion for consumers who were harmed by fraudulent or predatory practices.
But the agency’s priorities have shifted as of February 2025. U.S. Treasury Secretary Scott Bessent has ordered the CFPB’s operation suspended. Bessent’s order marks a significant change to the CFPB’s mission of protecting consumers from predatory practices that fell into “regulatory blind spots,” the Wall Street Journal points out.
CFPB’s Most Significant Cases
One of its most significant cases was the settlement to ban Navient, one of the country’s largest servicers, from the industry. The CFPB also fined Navient $120 million for years of abuses, which included overcharging customers and failing to inform them about their legal rights regarding payments.
In May 2024, CFPB also sued the Pennsylvania Higher Education Assistance Agency for attempting to collect student loans that had been discharged in bankruptcy.
Trump officials and Republicans in Congress have been hellbent on undoing much of the CFPB’s daily work and laying off CFPB staff. So far, under acting director Russell Vought, the bureau has dropped lawsuits against PHEA and Zelle. Republicans recently passed a resolution to void new digital payments regulations, and overdraft fees are no longer limited to $5. GOP lawmakers have also introduced measures to undo the medical debt rule, which Vice President Kamala Harris spearheaded.
Consumer Advocates have responded to Paoletta’s memo and say the bureau will leave student borrowers, for example, vulnerable to mistreatment.
“You are taking the idea of using risk to allocate resources and throwing it in the trash can, and instead, you are looking at the most stable parts of the financial system,” said Mike Pierce, founder of the Student Borrower Protection Center and a former CFPB staffer.
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