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• The Consumer Financial Protection Bureau (CFPB) has dropped its lawsuit against Capital One, alleging the bank cheated customers out of over $2 billion in savings account interest.
• This move follows a broader withdrawal from enforcement actions under the President Trump’s administration, which has halted most of the CFPB’s work.
• The decision marks a significant shift in consumer protection policies and raises concerns about future oversight.

Quick Brief

2-Minute Digest

Essential Context

The CFPB, created under the Dodd-Frank Wall Street Reform and Consumer Protection Act, has been a key watchdog for consumer protection in the financial sector since 2011. However, recent actions under the President Trump’s administration have significantly altered its enforcement stance.

Core Players

• Capital One – The banking giant accused of misleading customers about its savings account rates.
• Consumer Financial Protection Bureau (CFPB) – The federal agency responsible for consumer protection in the financial sector.
• Donald Trump – The President whose administration has overseen significant changes at the CFPB.
• Jonathan McKernan – President Trump’s nominee to head the CFPB, who has testified that the agency’s past actions were excessive.

Key Numbers

• $2 billion – The amount allegedly cheated from Capital One customers in savings account interest.
• $20.7 billion – The amount returned to consumers through CFPB law enforcement activities since its inception in 2011.
• 14 times – The difference in interest rates between the old and new savings accounts offered by Capital One.
• Jan. 14, 2025 – The day the CFPB filed the lawsuit against Capital One, just before President Trump’s inauguration.

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Complete Coverage

The Catalyst

The lawsuit against Capital One was filed on January 14, 2025, during the final days of the Biden administration. It alleged that Capital One misled customers by promoting its 360 Savings account as offering one of the nation’s highest interest rates while introducing a higher-yielding 360 Performance Savings account without informing existing customers.

Following President Trump’s inauguration on January 20, 2025, the CFPB’s director, Rohit Chopra, was fired, and the agency’s activities were significantly curtailed.

Inside Forces

The CFPB’s decision to drop the lawsuit reflects the internal dynamics within the agency under new leadership. President Trump’s administration has been critical of the CFPB’s past enforcement actions, labeling them as excessive. This criticism aligns with Jonathan McKernan’s testimony that the agency needs to be made more accountable to elected officials.

The agency has closed its headquarters, halted most of its work, and seen scores of its employees fired, marking a significant shift in its operational capacity.

Power Dynamics

The President Trump’s administration’s actions have significantly altered the power dynamics within the CFPB. By nominating McKernan and halting the agency’s enforcement activities, the administration has exerted substantial influence over the agency’s direction.

Erin Witte, director of consumer protection for the Consumer Federation of America, criticized the move, stating it sends a message that banks and financial institutions will face no consequences for violating consumer protection laws.

Outside Impact

The dropping of the lawsuit has broader implications for consumer protection. It suggests that the CFPB may no longer actively enforce consumer protection statutes, potentially leaving millions of consumers vulnerable to unfair practices.

Consumer advocacy groups are concerned that this move could result in billions of dollars in lost relief for consumers who have been treated unfairly by financial institutions.

Future Forces

The CFPB’s future under McKernan’s potential leadership is uncertain. McKernan has indicated that the agency will continue to operate but in a more streamlined form. This could mean fewer enforcement actions and less stringent consumer protections.

The outcome of McKernan’s Senate confirmation hearing will be crucial in determining the agency’s future direction and its ability to protect consumers effectively.

Data Points

• 2011: The CFPB began operating as an independent government agency.
• Jan. 14, 2025: The CFPB filed the lawsuit against Capital One.
• Jan. 20, 2025: President Trump’s inauguration and the subsequent firing of CFPB Director Rohit Chopra.
• Feb. 27, 2025: The CFPB dropped the lawsuit against Capital One and other companies.
• Feb. 24, 2025: Federal attorneys noted President Trump’s nomination of Jonathan McKernan to head the CFPB.