Our podcast show being released today is Part 2 of our two-part series featuring 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.

Part 1 of our two-part series was released last Thursday, June 12. 

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Legal Officer, dated April 16, 2025, entitled “2025 Supervision and Enforcement Priorities” (described below) which rescinded prior priority documents and established a whole new set of priorities which in most instances are vastly different than the Enforcement Priority documents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.”

During this part of the podcast show, we discussed the fact that the CFPB has entered into agreements with a few companies that had previously entered into consent agreements with former Director Chopra. After the recording of this podcast, the Federal District Court that presided over the Townstone Financial enforcement litigation involving alleged violations of the Equal Credit Opportunity Act refused to approve the rescission or undoing of the consent agreement based on Rule 60(b)(6) of the Federal Rules of Civil Procedure because of the strong public policy of preserving the finality of judgments.