Seven Democratic senators wrote Consumer Financial Protection Bureau Acting Director Russ Vought last week to “express profound alarm” that the agency in June terminated a 7-month-old consent order against Navy Federal Credit Union.
Sen. Ruben Gallego, D-AZ, and others contrasted the termination with an April memo in which CFPB Chief Legal Officer Mark Paoletta said the bureau would “focus its enforcement and supervision resources on pressing threats to consumers, particularly service members and their families, and veterans.”
“Your abrupt reversal of this consent order suggests your stated commitment to servicemembers is little more than lip service,” the senators wrote Wednesday to Vought.
Under the consent order, issued in November – when the CFPB was led by Biden-era Director Rohit Chopra – the bureau demanded that Navy Federal pay a $15 million civil penalty and $80.6 million in restitution to customers over illegally charged overdraft fees between 2017 and 2022.
The senators requested that Vought detail, by July 30, how much of that restitution remains unpaid and what portion of the civil penalty had been deposited, withheld or returned.
In June, Vought did not offer any reasoning behind the termination of the consent order – only that it had been done “with the consent of Navy Federal” and that the CFPB “waived any alleged non-compliance” for the credit union.
The senators on Wednesday asked Vought for the “full legal and factual basis” behind scrapping the consent order. Further, the lawmakers sought information on any communications or meetings between Navy Federal and the CFPB from Jan. 1 onward. They also asked who at the CFPB authorized the termination and which processes were followed. Pointedly, the senators asked if the CFPB’s Office of Servicemember Affairs had been consulted ahead of the termination.
“The CFPB’s mission is to protect consumers from unfair, deceptive or abusive practices and to hold lawbreaking companies accountable. Under your direction, it is doing neither,” the senators wrote to Vought. “This decision raises serious concerns about whether the Bureau is still capable — or even willing — to fulfill its legal mandate.”
Nearly immediately after being tapped to lead the CFPB, Vought set in motion efforts to neutralize the bureau. Before his first weekday on the job, Vought wrote Federal Reserve Chair Jerome Powell, indicating the bureau would refuse any unappropriated funds from the central bank. Vought also issued a stop-work order that preceded a move to fire 95% of the agency’s workforce. A federal judge issued an injunction to halt the maneuver.
That didn’t stop the CFPB, however, from dropping several court cases the bureau had pursued under the Biden administration – including against JPMorgan Chase, Bank of America, Wells Fargo, Capital One, Comerica and the fintech SoLo Funds.
Navy Federal’s consent order is not the only one the CFPB has reversed in recent months. The bureau in June freed Bank of America – three years early – from a penalty after the bank failed to collect required demographic data from mortgage applicants.
The CFPB also filed a motion in May to terminate a consent order against Trustmark Bank over redlining concerns. A federal judge denied the bureau’s attempt to vacate a separate redlining settlement against mortgage lender Townstone Financial.
The bureau has, however, successfully reduced penalties it previously ordered against some financial institutions. Specifically, the CFPB cut its nearly $2.5 million penalty against the fintech Wise to $450,000 in redress and a $45,000 fine.
In their letter Wednesday, the senators asked Vought how the termination of the Navy Federal order aligns with the bureau’s April prioritization of protections for service members. They also asked what analysis the bureau may have conducted as to the impact of the termination on affected consumers, and further asked whether those consumers were notified of the termination and how it might affect restitution.
Americans “deserve a Bureau that has their backs, not one that shields institutions from accountability,” the lawmakers wrote.
The senators also noted concerns from former CFPB officials with regard to the termination, pointing to a quote from the bureau’s ex-enforcement director, Eric Halperin, on Military.com.
"We are at a point where it's very uncertain whether the Consumer Financial Protection Bureau will ultimately step in on the side of consumers and not take the side of their bank as they did here for the Navy Federal customers," Halperin told the outlet this month.
Halperin resigned in February, a day after Vought issued the stop-work order.
In addition to Gallego, Sens. Elizabeth Warren of Massachusetts, Chris Van Hollen and Angela Alsobrooks of Maryland, Catherine Cortez Masto of Nevada, Tammy Duckworth of Illinois, Ron Wyden of Oregon and Raphael Warnock of Georgia signed the letter to Vought.
