Consumer Finance Monitor

Our podcast shows being released today and next Wednesday, June 18 feature two former CFPB senior officers who were key employees in the Enforcement Division under prior directors: Eric Halperin and Craig Cowie. Eric Halperin served as the Enforcement Director at the CFPB from 2010 until former Director, Rohit Chopra, was terminated by President Trump. Craig Cowie was an enforcement attorney at the CFPB from July 2012 until April 2015 and then Assistant Litigation Deputy at the CFPB until June 2018. The purpose of these podcast shows were primarily to obtain the opinions of Eric and Craig (two of the country’s most knowledgeable and experienced lawyers with respect to CFPB Enforcement) about the legal and practical impact of (i) a Memo to CFPB Staff from Mark Paoletta, Chief Legal Officer, dated April 16, 2025, entitled “2025 Supervision and Enforcement Priorities” (described below) which rescinded prior priority documents and established a whole new set of priorities which in most instances are vastly different than the Enforcement Priority documents which guided former directors,  (ii) the dismissal without prejudice of the majority of enforcement lawsuits that were pending when Acting Director Russell Vought was appointed to run the agency, and (iii) other drastic steps taken by CFPB Acting Director Russell Vought to minimize the functions and staffing at the agency. That included, among other things, an order calling a halt to all work at the agency, including the pausing of ongoing investigations and lawsuits and the creation of plans by Vought to reduce the agency’s staff (“RIF”) from about 1,750 employees to about 250 employees (including a reduction of Enforcement staff to 50 employees from 258). We described in detail the 2025 Supervision and Enforcement Priorities as follows: ·       Reduced Supervisory Exams: A 50% decrease in the overall number of exams to ease burdens on businesses and consumers. ·       Focus on Depository Institutions: Shifting attention back to banks and credit unions. ·       Emphasis on Actual Fraud: Prioritizing cases with verifiable consumer harm and measurable damages. ·       Redressing Tangible Harm: Concentrating on direct consumer remediation rather than punitive penalties. ·       Protection for Service Members and Veterans:Prioritizing redress for these groups. ·       Respect for Federalism: Minimizing duplicative oversight and coordinating with state regulators when possible. ·       Collaboration with Federal Agencies: Coordinating with other federal regulators and avoiding overlapping supervision. ·       Avoiding Novel Legal Theories: Limiting enforcement to areas clearly within the Bureau's statutory authority. ·       Fair Lending Focus: Pursuing only cases of proven intentional racial discrimination with identifiable victims and not using statistical evidence for fair lending assessments. Key Areas of Focus: ·       Mortgages (highest priority) ·       FCRA/Regulation V (data furnishing violations) ·       FDCPA/Regulation F (consumer contracts/debts) ·       Fraudulent overcharges and fees ·       Inadequate consumer information protection Deprioritized Areas: ·       Loans for "justice involved" individuals ·       Medical debt ·       Peer-to-peer lending platforms ·       Student loans ·       Remittances ·       Consumer data ·       Digital payments We also described the status of a lawsuit brought by the union representing CFPB employees and other parties against Vought seeking to enjoin him from implementing the RIF. The Court has granted a preliminary injunction which so far has largely prevented Vought from following through on the RIF. The matter is now on appeal before the DC Circuit Court of Appeals and a ruling is expected soon. These podcast shows complement the podcast show we released on June 5 which featured two former senior CFPB employees, Peggy Twohig and Paul Sanford who opined about the impact of the April 16 Paoletta memo and proposed RIF on CFPB Supervision. Eric and Craig considered, among other issues, the following: 1.  How do the new Paoletta priorities differ from the previous priorities and what do the new priorities tell us about what we can expect from CFPB Enforcement? 2.  What do the new priorities tell us about the CFPB’s new approach toward Enforcement priorities? 3.  What can we learn from the fact that the CFPB has dismissed without prejudice at least 22 out of the 38 enforcement lawsuits that were pending when Vought became the Acting Director?  What types of enforcement lawsuits are still active and what types of lawsuits were dismissed? 4.  What are the circumstances surrounding the nullification of certain consent orders (including the Townstone case) and the implications for other consent orders? 5. Has the CFPB launched any new enforcement lawsuits under Vought? 6. What level and type of enforcement is statutorily required? 7.  Realistically, what will 50 employees be able to do in the enforcement area? 8. What will be the impact of the Supervision cutbacks be on Enforcement since Supervision refers many cases to Enforcement? 9.  Will the CFPB continue to seek civil money penalties for violations of law? 10.  What types of fair lending cases will the CFPB bring in the future? 11.  Will Enforcement no longer initiate cases based on the unfairness or abusive prongs of UDAAP? Alan Kaplinsky, former practice group leader for 25 years and now Senior Counsel of the Consumer Financial Group, hosts the podcast show. Postscript: After the recording of this podcast, Cara Petersen, who succeeded Eric Halperin as head of CFPB Enforcement, resigned abruptly on June 10 from the CFPB after sending out an e-mail message to all its employees (which was shared with the media) which stated, in relevant part: “I have served under every director and acting director in the bureau’s history and never before have I seen the ability to perform our core mission so under attack,” wrote  Petersen, who had worked at the agency since it became operational in 2011. She continued: “It has been devastating to see the bureau’s enforcement function being dismantled through thoughtless reductions in staff, inexplicable dismissals of cases, and terminations of negotiated settlements that let wrongdoers off the hook.” “It is clear that the bureau’s current leadership has no intention to enforce the law in any meaningful way,” Petersen wrote in her e-mail. “While I wish you all the best, I worry for American consumers.”

Our podcast show being released today features two former CFPB senior officers who were key employees in the Supervision Division under prior directors: Peggy Twohig and Paul Sanford. Peggywas a founding executive of the CFPB when the agency was created in 2010 and led the development of the first federal supervision program over nonbank consumer financial companies. Beginning in 2012, as head of CFPB’s Office of Supervision Policy, Peggy led the office responsible for developing supervision strategy for bank and nonbank markets and ensuring that federal consumer financial laws were applied consistently in supervisory matters across markets and regions. Paul served as head of the Office of Supervision Examinations for the CFPB from 2012-2020 with responsibility for ensuring the credible conduct of consumer protection examinations. The purpose of this podcast show was primarily to obtain the opinions of Peggy and Paul about the legal and practical impact of (i) a Memo to CFPB Staff from Mark Paoletta, Chief Legal Officer, dated April 16, 2025, entitled “2025 Supervision and Enforcement Priorities” which rescinded prior priority documents and established a whole new set of priorities which in most instances are vastly different than the Supervision Priority documents which guided former directors and (ii) drastic steps taken by CFPB Acting Director Russell Vought to minimize the functions and staffing at the agency. That included, among other things, an order calling a halt to all work at the agency, the cancellation of all supervisory exams and the creation of plans by Vought to reduce the agency’s staff (“RIF”) from about 1,750 employees to about 250 employees (including a reduction of Supervision’s staff to 50 employees) We also described the status of a lawsuit brought by the union representing CFPB employees and other parties against Vought seeking to enjoin him from implementing the RIF. The Court has granted a preliminary injunction which so far has largely prevented Vought from following through on the RIF. The matter is now on appeal before the DC Circuit Court of Appeals and a ruling is expected soon. Peggy and Paul describe in detail the CFPB Supervision priorities under Director Chopra and compare and contrast those priorities with the new priorities established by Paoletta which are: 1.  “Shift back” CFPB Supervision to the proportions focused on depository institutions to nonbanks to where it was in 2012 -- to a 70% depository and 30% nonbank, compared to the more recent 60% on nonbanks to 40% depositories.  2.  Focus CFPB Supervision on “conciliation, correction, and remediation of harms subject to consumer complaints” and “collaborative efforts with the supervised entities to resolve problems so that there are measurable benefits to consumers.” 3.  Focus CFPB Supervision on “actual fraud” where there are “identifiable victims with material and measurable consumer damages as opposed to matters where the consumers made “wrong” choices. 4. Focus CFPB Supervision on the following priorities: ·       Mortgages as the highest priority ·       FCRA/Reg V data furnishing violations ·       FDCPA/Reg F relating to consumer contracts/debts ·       Fraudulent overcharges, fees, etc. ·       Inadequate controls to protect consumer information resulting in actual loss to consumers. 5.  Focus CFPB Supervision on providing redress to service members and their families and veterans. 6. The areas that will be deprioritized by CFPB Supervision will be loans for “justice involved” individuals, medical debt, peer-to-peer platforms and lending, student loans, remittances, consumer data and digital payments.  7. Respect Federalism” and not prioritize supervision where States “have and exercise” ample regulatory and supervisory authority and participating in multi-state exams (unless required by statute). 8.  Eliminate duplicative supervision where other federal agencies have supervisory jurisdiction 9.  Not pursue supervision under “novel legal theories.” 10.  For fair lending, ignore redlining or “bias assessment” based solely on statistical evidence, and only pursue matters with “proven actual intentional racial discrimination and actual identified victims.” Peggy and Paul also discussed their skepticism as to whether CFPB Supervision will be able to comply with its statutory duties if the RIF is carried out and Supervision’s staff is reduced to 50 employees. Alan Kaplinsky, former longtime Chair of the Consumer Financial Group and now Senior Counsel hosted the podcast.

We are releasing today on our podcast show a repurposed webinar which we produced on May 13, 2025 entitled “What is happening at the federal agencies (other than the CFPB) that is relevant to the consumer financial services industry.” During this podcast, we will inform you about recent developments at those other agencies, including the FTC, OCC, FDIC, FRB and DOJ (collectively, the “Agencies”) and the White House (through the issuance of Executive Orders). Some of the issues we consider are: •        What are the strategic priorities of the Agencies, including cryptocurrency (OCC, FRB and DOJ); reducing regulatory burden, promoting financial inclusion, embracing bank-fintech partnerships and expanding responsible bank activities involving digital assets (OCC); adopt a more open-minded approach to innovation and technology adoption (FDIC); public inquiry into anti-competitive regulations (FTC and DOJ); and regulation of AI technology, boosting protections for children and teens online and strengthening enforcement against companies that sell, transfer, or disclose Americans’ geolocation information and other sensitive data to foreign adversaries, more emphasis on antitrust enforcement and less on consumer protection (FTC). •        What is the status of proposed or final regulations of the Agencies? (e.g., FTC CARS Rule, Click-to-Cancel Rule, Junk Fees Rule, and Rule banning Noncompetes; FDIC advertisement and brokered-deposit rules, OCC rule on bank mergers; and the Community Reinvestment Act final rule)? •        What is the status of enforcement investigations and litigation of the Agencies? •        What impact will staff cuts have on supervisory examinations? •        What is the impact of President Trump’s executive order requiring the Agencies to obtain approval from the White House of all proposed and final regulations? •        Will the Supreme Court approve of President Donald Trump’s firing of the Democratic members of the FTC and NCUA and other federal agencies (who have subsequently sued Trump to challenge the firings) and, if so, what are its implications? •        What is the significance of the FDIC and OCC agreeing to eliminate “reputation risk” as a basis for evaluating risks to banks? •        Will the OCC adopt a regulation or other guidance, or will Congress enact legislation pertaining to debanking/fair access? •        Will the OCC and/or FDIC issue any guidance or regulations pertaining to federal preemption of state law in light of the Supreme Court’s opinion last term in Cantero and the impending Courts of Appeal decisions in Cantero, Kivett and Conti? •        What is the significance of the FDIC withdrawing its amicus brief in support of the Colorado Attorney General in the 10th Circuit in the lawsuit brought by industry against him challenging a Colorado statute which purported to opt out of Section 521 of DIDMCA? •        Will there continue to be fair lending and disparate impact enforcement at any of the Agencies? Alan Kaplinsky, former chair and now senior counsel of Ballard Spahr’s Consumer Financial Services Group, moderated the presentations of the following other members of the Consumer Financial Services Group:  Scott Coleman, Ronald Vaske and Kristen Larson.

Our podcast show being released today will focus on S.  919, the Guiding and Establishing  National Innovation for U. S. Stablecoins Act of 2025 or GENIUS Act which was reported out of the Senate Banking, Housing, and Urban Affairs Committee by a bipartisan vote of 18-6. The bill would establish a regime to regulate stablecoins.  Our guest today, Professor Art Wilmarth of George Washington University School of Law, published an op-ed on March 6 in the American Banker in which he wrote that the “..bill would allow stablecoins, which are volatile deposit-like instruments, to be offered to the public without the essential protections provided by federal deposit insurance and other regulatory safeguards regarding banks that are insured by the Federal Deposit Insurance Corp. By placing the federal government's imprimatur on poorly regulated and unstable stablecoins, the …bill would greatly increase the probability that future runs on stablecoins would trigger systemic crises requiring costly federal bailouts to avoid devastating injuries to our financial system and economy.” Our podcast show was designed to be of interest to both crypto neophytes and experts. During this podcast, we explore the following issues:            1. What are stablecoins, and what are their present and potential use cases?            2.  How do stablecoins differ from other types of crypto like bitcoin?            3. How many companies issue stablecoins today?  4. What is the total volume in dollars of outstanding stablecoins?  Has it been growing?  Do all stablecoin issuers also issue other types of crypto?            5. Do any banks issue stablecoins?  If not, why not? 6.  Are there any federal or state regulations that apply to stablecoins today?  What about state money transmitter laws?  7.  Do stablecoins provide a better way to improve the speed and reliability of payments compared to other ways of making payments? Do they offer any benefits that are NOT currently offered by tokenized bank deposits and the instant payment and settlement services offered by FedNow and the Clearing House's Real Time Payment Network?  How do stablecoins on public blockchains compare to tokenized deposits held on private electronic bank ledgers, in terms of safety, reliability, and efficiency. 8.   Professor Wilmarth describes a typical stablecoin transaction and the fact that stablecoin issuers often pay interest on stablecoins that are the equivalent of money market mutual funds and way more than banks pay on passbook or statement savings accounts or checking accounts.            9.  How do stablecoin issuers generate revenue? 10.   What are the potential risks of stablecoins, especially if they can be offered by nonbanks and are not covered by federal deposit insurance?  Would they present the same risks as money market funds, which the Fed and Treasury bailed out in 2008 and again in 2020? Have there been any examples of these risks being realized?  Have there been any failures? What happens if a stablecoin issuer fails?  Does bankruptcy law (as amended by the GENIUS Act), provide a feasible process for dealing with failures of stablecoin issuers?  If nonbank stablecoin issuers become large financial institutions and get into serious trouble, would the federal government be able to finance another series of massive bailouts similar to those of 2007-09 and 2020-21 without risking a crisis in the Treasury bond market and/or another surge of inflation? 11.  Will Big Tech firms issuing stablecoins be able to dominate our banking system and economy and would that necessarily be a bad thing? 12. Which firms are likely to be the most significant issuers of stablecoins if nonbanks are allowed to conduct that activity?  If Big Tech firms are allowed to offer stablecoins, could they use stablecoins to offer banking services and eventually dominate the banking industry?  What should we learn from China's experience with Ant Financial Group (Alipay) and Tencent (WeChat Pay), China's two largest Big Tech firms, which became dominant providers of financial services to Chinese consumers and households? 13.  We then discussed the so-called GENIUS ACT which the Senate Banking Committee passed by an 18-6 bipartisan vote on March 13. What are the major features of the Act?            14.  What are your major concerns about the bill? 15. What would the stablecoin market look like if Congress passed the GENIUS Act in the form that it was approved by the Senate Banking Committee? 16.  Should we require all issuers and distributors of stablecoins to be FDIC-insured banks?  Why do you believe that federal banking laws governing FDIC-insured banks provide a far better approach for regulating issuers of stablecoins? [After the recording of this podcast, the bill ran into rough sledding on the floor for a couple of weeks with some Senators, like Senator Elizabeth Warren, raising consumer protection issues similar to those raised by Professor Wilmarth and other Senators raising concerns about President Trump’s family substantially benefiting from enactment of the bill. However, on May 19, after negotiations among Senate Democrats and Republicans to amend the Bill to add consumer protections, limits on tech companies issuing stablecoins and ethics standards for special government employees, like Elon Musk, the Bill advanced on a bipartisan procedural vote to prevent filibustering in the Senate, 66-32, making it likely that the Bill will pass the Senate by a super-majority vote. The fate of the Bill in the House is less certain.] Alan Kaplinsky, Senior Counsel and formerly the Chair for 25 years of the Consumer Financial Services, hosted the podcast show.

Today’s podcast show is a repurposed webinar that we produced on April 22nd, titled “Navigating State AG Investigations: A Playbook For Financial Services Companies.” State Attorneys General (AG) investigations can present significant challenges for businesses and legal practitioners. We offer a detailed dive into effective strategies and practical tips drawn from our State AG Investigation Playbook. Our speakers, Mike Kilgarriff, Joseph Schuster, and Jenny Perkins from our Consumer Financial Services Group, Adrian King, Jr. from our Government Affairs and Public Policy Group, and Hank Hockeimer from our White Collar Defense and Investigations Group, will guide you through the key aspects of handling these investigations, from initial inquiry to resolution. Key topics include: ·        Understanding the scope and authority of State AGs ·        Compliance Readiness: Preparing for State AG scrutiny Before it Starts ·        Best practices for responding to State AG inquiries ·        Coordination with federal regulators ·        Strategies for negotiating settlements and resolutions ·        Managing public relations and media during an investigation ·        Case studies illustrating successful outcomes Alan Kaplinsky, Senior Counsel of the Consumer Financial Services Group, hosts the podcast show.

Today’s podcast features Stephen Calkins, a law professor at Wayne State University in Detroit and former General Counsel of the Federal Trade Commission (the “FTC”). President Trump recently fired, without good cause, the two Democratic members of the FTC, leaving only two Republican members as commissioners. He did this even though the FTC Act provides that a commissioner may be fired by the President only for good cause and that the commission is to be governed by a bi-partisan 5-member commission This is the third time in the past few weeks that Trump has fired without good cause democratic members of other federal agencies; the other two being the National Labor Relations Board (The “NLRB”) and the Merit Selection Protection Board (The “MSPB”). The statutes governing those two agencies, like the FTC Act, allow the President to fire a member of the governing board for good cause only. The fired members of all three agencies initiated lawsuits in federal district court for the District of Columbia, seeking mandatory preliminary injunctions requiring those agencies to reinstate them with back pay. We discuss the status of the two lawsuits and how the outcome will turn on whether the Supreme Court will apply or overrule a 1935 Supreme Court opinion in Humphrey’s Executor, which held that the provision in the Constitution allowing the President to fire an FTC commissioner for good cause only did not run afoul of the separation of powers clause in the Constitution. Conversely, the Supreme Court will need to determine whether the Supreme Court opinion in Seila Law, LLC V. Consumer Financial Protection Bureau should apply to these two new cases. In Seila Law, the Supreme Court held on Constitutional grounds, that the President could fire without good cause the sole director of the CFPB even though the Dodd-Frank Act allowed the President to fire the sole director of the CFPB for good cause only. Until this gets resolved, the FTC will be governed only by two Republican commissioners who will constitute a quorum for purposes of conducting official business. Professor Calkins explains how a Supreme Court ruling in these two new cases upholding Trump’s firing of the Democratic members of the agencies could enable the President to fire without good cause members of other multiple-member agencies, like the Federal Reserve Board. We then discuss the status of the following four final controversial FTC rule, some of which were challenged in court: the CARS Rule, the Click-to-Cancel Rule, the Junk Fee Rule, and the Non-Compete Rule. We also discuss the impact of President Trump’s Executive Order requiring that all federal agencies, including so-called “independent” agencies, must obtain approval from the White House before taking any significant actions, like proposing or finalizing rules. Then, we discuss the status of enforcement investigations and litigation and whether any of them have been voluntarily dismissed with prejudice by the FTC under Trump 2.0, whether any new enforcement lawsuits been filed, and what they involve. We discuss our expectation that the FTC will be a lot less active in the consumer protection enforcement area during Trump 2.0. We then discuss the impact on staffing because of DOGE-imposed reductions-in-force. Finally, we touch upon the status of pending antitrust enforcement lawsuits. Alan Kaplinsky, former practice group leader for 25 years of the Consumer Financial Services Group and now Senior Counsel, hosts the discussion.

The podcast we are releasing today is part 2 of a re-purposed webinar we produced on March 25 titled “The Impact of the Election on the CFPB - Part 4.” As a result of the diminishing impact of the CFPB on enforcing the consumer financial services laws, we expect that void to be filled by state government enforcement agencies and private civil litigation, including class and mass actions.  Our webinar focused on private civil litigation. Our featured guest for this webinar was Ira Rheingold, Executive Director of the National Association of Consumer Advocates. He was joined on the panel by Thomas Burke, Dan McKenna, Jenny Perkins, Joseph Schuster, and Melanie Vartabedian, litigators in our firm’s Consumer Financial Services Group. We discussed the following areas where the panelists are predicting an increase in private civil litigation during 2025 and beyond: 1. Solar Litigation Trends (Ira, Melanie). 2. Increased volume of arbitrations and mass arbitrations (Ira, Dan). 3. A general emphasis on “unfair” practices, including a close look at alleged unlawful fees (Ira). 4.  Crypto industry practices -fees, deception and third-party responsibility (Ira). 5.  National Bank Act preemption and DIDMCA opt-out litigation (Joseph). If you missed listening to part 1 of this re-purposed webinar, you can access the podcast in the link to the following blog which appears here. The blog describes the topics we covered. Alan Kaplinsky, the former chair for 25 years and now the Senior Counsel of the Consumer Financial Services Group, hosted the podcast show. For our podcasts repurposed from webinars that we produced as part of our series entitled “The Impact of the Election on the CFPB” Part 1 (regulations and other written guidance), click here and here; Part 2 (supervision and enforcement),  click here and here; Part 3 (state AGs and departments of banking), click here and here. 

The podcast we are releasing today is part 1 of a re-purposed webinar we produced on March 25 titled “The Impact of the Election on the CFPB - Part 4.” As a result of the diminishing impact of the CFPB on enforcing the consumer financial services laws, we expect that void to be filled by state government enforcement agencies and private civil litigation, including class and mass actions. Our webinar will focus on private civil litigation. Our featured guest for this webinar was Ira Rheingold, Executive Director of the National Association of Consumer Advocates. He was joined on the panel by Thomas Burke, Dan McKenna, Jenny Perkins, Joseph Schuster, and Melanie Vartabedian, litigators in our firm’s Consumer Financial Services Group. The podcast began with Ira observing that state enforcement agencies and plaintiffs’ class action lawyers will be taking a careful look at enforcement actions voluntarily dismissed by the CFPB to ascertain whether the complaints should be re-filed by them in federal or state court.  We then proceeded to discuss the following areas where the panelists are predicting an increase in private civil litigation during 2025 and beyond: Increased FCRA litigation, especially in ID Theft (Jenny, Ira). The use of AI and corporate responsibility for ensuring that it does not create unfair or discriminatory practices (Ira). Increased retail bank litigation, including EFTA claims (Ira, Tom). Part 2 of this re-purposed webinar will be released next Thursday, May 1. Alan Kaplinsky, the former chair for 25 years and now Senior Counsel of the Consumer Financial Services Group, hosted the podcast show. For our podcasts repurposed from webinars that we produced as part of our series entitled “The Impact of the Election on the CFPB” Part 1 (regulations and other written guidance), click here and here; Part 2 (supervision and enforcement),  click here and here; Part 3 (state AGs and departments of banking), click here and here. 

Our podcast show being released today is part 2 of a repurposed interactive webinar that we presented on March 24 featuring two of the leading journalists who cover the CFPB - Jon Hill from Law360 and Evan Weinberger from Bloomberg. Our show begins with Tom Burke, a Ballard Spahr consumer financial services litigator, describing in general terms the status of the 38 CFPB enforcement lawsuits that were pending when Rohit Chopra was terminated. The cases fall into four categories: (a) those which have already been voluntarily dismissed with prejudice by the CFPB; (b) those which the CFPB has notified the courts that it intends to continue to prosecute; (c) those in which the CFPB has sought a stay for a period of time in order for it to evaluate whether or not to continue to prosecute them where the stay has been granted by the courts; and (d) those in which the CFPB’s motion for a stay has been denied by the courts or not yet acted upon. Alan Kaplinsky then gave a short report describing a number of bills introduced this term related to the CFPB. Alan remarked that the only legislative effort which might bear fruit for the Republicans is to attempt to add to the budget reconciliation bill a provision subjecting the CFPB to funding through Congressional appropriations. Such an effort would need to be approved by the Senate Parliamentarian. Finally, Alan expressed surprise that the Republicans, in seeking to shut down the CFPB, have not relied on the argument that the CFPB has been unlawfully funded by the Federal Reserve Board since September 2022 because there has been no “combined earnings of the Federal Reserve Banks” beginning then through the present. (Dodd-Frank stipulates that the CFPB may be funded only out of such “combined earnings”). For more information about that funding issue, listen to Alan’s recent interview of Professor Hal Scott of Harvard Law School who has written prolifically about it. On Monday of this week, Professor Scott published his third op-ed in the Wall Street Journal, in which he concluded: “Since the bureau is operating illegally, the president can halt its work immediately by executive order. The order should declare that all work at the CFPB will stop, that all rules enacted since funding became illegal in September 2022 are void, and that no new rules will be enforced.” Joseph Schuster then briefly described what has been happening at other federal agencies with respect to consumer financial services matters. Joseph and Alan reported on the fact that President Trump recently fired without cause the two Democratic members of the Federal Trade Commission leaving only two Republican members on the Commission. He took that action despite an old Supreme Court case holding that the language in the FTC Act stating that the President may remove an FTC member only for cause does not run afoul of the separation of powers clause in the Constitution.  The two Democratic commissioners have sued the Administration for violating the FTC Act provision, stating that the President may only remove an FTC commissioner for cause. The President had previously fired Democratic members at the Merit Systems Selection Board and National Labor Relations Board. President Trump based his firings on the belief that the Supreme Court will overrule the old Supreme Court case on the basis that the “termination for cause” language in the relevant statutes is unconstitutional. After the recording of this webinar, the DC Circuit Court of Appeals stayed, by a 2-1 vote, a District Court order holding that Trump’s firing of the Democratic members of the NLRB and Merit Systems Selection Board was unlawful. That order was subsequently overturned by the court of appeals acting en banc. Subsequently, Chief Justice Roberts stayed that order. In light of these developments, it seems unlikely that the two FTC commissioners will be reinstated, if at all, until the Supreme Court decides the case. Also, after the recording of this webinar, the Senate confirmed a third Republican to be an FTC commissioner. For those of you who want a deeper dive into post-election developments at federal agencies other than the CFPB, please register for our webinar titled “What Is Happening at the Federal Agencies (Other Than the CFPB) That is Relevant to the Consumer Financial Services Industry?” which will occur on May 13, 2025. Joseph then discussed developments at the FDIC where the FDIC withdrew the very controversial brokered deposits proposal, the 2023 corporate governance proposal, the Change-in-Bank- Control Act proposal and the incentive-based compensation proposal. He also reported that the FDIC rescinded its 2024 Statement of Policy on Bank Merger Transactions and delayed the compliance date for certain provisions in the sign and advertising rule.  Joseph then discussed developments at the OCC where it (and the FDIC) announced that it would no longer use “reputation risk” as a basis for evaluating the safety and soundness of state-chartered banks that it supervises. The OCC, also, conditionally approved a charter for a Fintech business model to be a national bank and withdrew statements relating to crypto currency risk. Finally, Joseph discussed how state AGs and departments of banking have significantly ramped up their enforcement activities in response to what is happening at the CFPB. The podcast ended with each participant expressing his view on what the CFPB will look like when the dust settles. The broad consensus is that the CFPB will continue to operate with a greatly reduced staff and will only perform duties that are statutorily required. It is anticipated that there will be very little rulemaking except for rules that the CFPB is required to issue - namely, the small business data collection rule under 1071 of Dodd-Frank and the open banking rule under 1033 of Dodd-Frank. The panel also felt that the number of enforcement lawsuits and investigations will measurably decline with the focus being on companies engaged in blatant fraud or violations of the Military Lending Act. This podcast show was hosted by Alan Kaplinsky, the former practice group leader for 25 years and now senior counsel of the Consumer Financial Services Group. If you missed part 1 of our repurposed webinar produced on March 24, click here for a blog describing its content and a link to the podcast itself. In short, part 1 featured Jon Hill from Law360 and Evan Weinberger from Bloomberg, who chronicle the initiatives of CFPB Acting Directors Scott Bessent and Russell Vought and DOGE to dismantle the CFPB and the status of the two lawsuits brought to enjoin those initiatives. Ballard Spahr partners John Culhane and Rich Andreano give a status report on the effort of Acting Director Vought to nullify most of the final and proposed rules and other written guidance issued by Rohit Chopra. The podcast concludes with John and Rich describing the fact that supervision and examinations of banks and non-banks is non-existent.

Our podcast show being released today is Part 1 of a repurposed interactive webinar that we presented on March 24, featuring two of the leading journalists who cover the CFPB - Jon Hill from Law360 and Evan Weinberger from Bloomberg. Our show began with Jon and Evan chronicling the initiatives beginning on February 3 by CFPB Acting Directors Scott Bessent, Russell Vought and DOGE to shut down or at least minimize the CFPB. These initiatives were met with two federal district court lawsuits (one in DC brought by the labor unions who represents CFPB employees who were terminated and the other brought in Baltimore, MD by the CFPB and others) challenging one or more of these initiatives. Jon and Evan described the lawsuits in detail. While the Baltimore lawsuit was dismissed on the basis of lack of ripeness under the Administrative Procedure Act, Judge Amy Berman Jackson issued a TRO freezing the CFPB from terminating more CFPB employees through the end of March while she decides whether to enter a further injunction with respect to the CFPB’s initiatives. Ballard Spahr partners, Rich Andreano and John Culhane, then gave an up-to-date status report on CFPB (a) final rules being challenged in litigation and/or eligible to be challenged under the Congressional Review Act; (b) final rules not being challenged in litigation which may be repealed or amended or whose effective or compliance dates may be extended under the Administrative Procedure Act; (c) proposed rules; and (d) non-rule written guidance. Rich and John paid particular attention to the following final rules: 1.  The Small Business Loan Data Collection and Reporting Rule under Section 1071 of      Dodd-Frank 2.  The Non-bank enforcement order Registry Rule 3.  The Fair Credit Reporting Act “Data Broker” Rule 4.  The Residential Property Assessed Clean Energy (PACE) Financing Rule 5.  The Residential Mortgage Servicing Proposed Rule 6.  Credit Card Penalty fees under Reg Z (Late Fee Rule) 7. Personal Financial Data Rights (Open Banking) Rule under Section 1033 of Dodd-Frank 8.  Overdraft Lending Rule Applicable to very large financial institutions 9. Prohibition on creditors and consumer reporting agencies reporting medical debt under Reg V Part 1 of our podcast concludes with Rich and John describing the fact that supervision and examination of banks and non-banks is apparently on hold. This podcast show was hosted by Alan Kaplinsky, the former practice group leader for 25 years of the Consumer Financial Services Group and now Senior Counsel.