With The CFPB Hobbled, The Federal Vacuum Has a Consequence
The CFPB has scaled back some enforcement priorities, and the states have noticed. Certain states – including California, New York, Texas, and Connecticut – are particularly active, pursuing UDAP violations, privacy issues, and fee/disclosure challenges.
For banks with a nationwide or multi-state footprint, this is a game-changer. The patchwork of state-level enforcement can be unpredictable, expensive, and politically influenced.
What This Means for Banks and Other Financial Institutions
Layered Investigations
You might face multiple AGs probing the same conduct, each with slightly different theories.
Politically Driven Priorities
Enforcement agendas can shift quickly, sometimes in response to headlines rather than actual risk.
Inconsistent Standards
States interpret statutes differently, and uniform compliance is hard to achieve.
Actionable Steps to Stay Ahead
Map Your Exposure by State
Keep a live inventory of relevant statutes, emerging enforcement trends, and high-risk product lines.
Build a Multistate Response Playbook
Pre-draft templates, assign response teams, and create escalation protocols. Being ready is better than reacting under pressure.
Monitor Public Statements and Enforcement Priorities
Overdraft fees, call frequency, and credit reporting accuracy are areas often flagged before investigations start.
Coordinate Settlements When Possible
Avoid inconsistent obligations or duplicate payments by negotiating a single, comprehensive resolution across states.
Bottom Line
Until and unless the CFPB is restored to its pre-2024 status, State-driven enforcement is here to stay. Banks and other financial institutions that treat it as an operational reality – rather than an occasional headache – will adapt faster, litigate more efficiently, and reduce exposure.
