A federal judge has ordered a halt, for now, to the Consumer Financial Protection Bureau’s (CFPB) mass staff reduction last Thursday of some 88%-90% of its workforce, per a Reuters report. Meanwhile, regardless of the cuts, James W. Brody, Esq., senior partner at Garris Horn LLP, broke down the CFPB’s enforcement and supervision memo that surfaced last week, and what it means for lenders and others.
“As happens with each new administration, director, or year, the Consumer Financial Protection Bureau released its new supervision and enforcement priorities for 2025,” Brody observed in comments he provided to National Mortgage Professional. But this year, he said, was something out of the ordinary.
“Industry participants have [typically] gained this information through some type of public or official comments given at the end of the previous or beginning of the new year,” noted Brody. “The prioritization goals for the agency in 2025 are a little different in that they were released in a memo to staff outlining the prioritization, as opposed to some type of public event covered in the press.”
Not only was the method of delivery of the agency’s priorities unusual, the memo itself went into greater depth as far as the information it provided. “When you look at the contents of the CFPB’s 2025 staff memo versus past years — public comments that indicated prioritization — the 2025 staff memo gives a greater amount of details and transparency. This is a huge win for industry participants,” Brody contended.
Even when given the CFPB supervision and enforcement priorities in the past, “lenders have frequently still been left in the dark,” Brody underscored. “For lenders that wanted to be compliant, it was a guessing game and expenditure of company resources trying to prepare in multiple ways for the unknown.”
But this time around, the memo’s more intricate level of detail will allow companies to concentrate their time, resources, and efforts on areas that cause the most consumer harm, “which the CFPB memo clearly shows will be its main focus,” according to Brody. That’ll be a good thing for the lending industry overall, he said, especially given that industries such as mortgage have been in a downturn for years.
“As with any industry in a downturn, companies really have to manage their resources,” Brody pointed out. “When companies are spreading out their resources, there may be a lot of gaps that get missed or aren’t reviewed thoroughly enough.”
Given greater detail about the CFPB’s priorities, “companies can now put their resources into ensuring strong processes for consumers” — which was one of the original goals of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted in 2010 in response to the 2007-2008 financial crisis, and of the CFPB itself.
“It’s even spelled out in the name of the agency: the Consumer Financial Protection Bureau,” Brody noted. The new directives for the CFPB could be a win for consumers as well, he added, since companies won’t be “trying to squeeze every penny out of every transaction and can be more competitive against peers.”
The information listed in the CFPB’s staff memo included that the agency will shift its focus back to depository institutions. “After the Great Recession that peaked in 2008 to 2010, when the CFPB was really starting to become a driving force, its focus was on depository institutions,” Brody said, and thus the memo means the CFPB will be returning to its roots.
Brody pointed to a report from the Consumer Financial Services Law Monitor that in the CFPB’s early years, 70% of its supervision focused on banks and depository institutions. “This makes sense, as banking in general is part of almost everyone’s daily lives,” he commented.
The CFPB’s staff memo also outlines a reduction in overall examinations of companies. And meanwhile, states “have really stepped up and either implemented or expanded their supervision — much of which mimics or follows the federal agency guidelines,” observed Brody.
“So, a reduction of CFPB examinations doesn’t mean that independent or smaller lenders won’t be monitored,” Brody said. “Many of those might never have been chosen for examination by the CFPB at all.”
Many concepts and elements included in the CFPB’s staff memo aren’t new, he contended. The memo spells out that the CFPB will coordinate with other agencies, for example, “and this has already been occurring in rulemaking, as seen in joint statements,” Brody told NMP. That greater coordination among federal agencies ultimately may help bring lenders and others greater clarity.
“The memo’s prioritization turns that [increased] coordination [among the CFPB and other federal agencies] from not just rulemaking to rule-enforcing, when possible,” Brody said. “This may help provide clarity for rules that have been interpreted differently by different agencies, or even different examiners.”
“If you really look at the details, the CFPB memo doesn’t exclude any specific area or processes from review — it just focuses priorities on areas that cause actual consumer harm,” emphasized Brody.
